Spreadsheets, strategies help make fuel use decisions
Casper — Although signs posting fuel prices out by the highway no longer read four dollars a gallon for diesel, fuel use reduction remains a strategy to reduce input costs on a ranch or farm operation.
In December 2008 University of Wyoming Extension Beef Specialist Steve Paisley gave a presentation for University of Nevada Livestock Extension Specialist Ron Torrell, in which Torrell had run a series of budgets and spread sheets to decide whether he should purchase a smaller commuter truck to use in place of his four-door diesel when driving back and forth to his partner’s place 75 miles away.
Torrell’s truck is a 2001 four-door pickup valued at $20,000. Based on that and four-dollar diesel, he determined it costs him 67 cents per mile, or $100 per round trip to go work cattle with his partner. “Of that $100, $40 was for fuel, $23 for depreciation, $19 for repairs and maintenance, $10 in interest and $5 in insurance and license fees,” said Paisley. “That’s what he thinks it costs him to keep that pickup and run it that 150-mile round trip.”
Torrell used a spreadsheet from Texas A&M to set a framework on whether or not it would be profitable to park his big truck for a part of his mileage. Of the fallen gas prices, Paisley joked, “If diesel goes back up, the take home message is if you want to reduce your fuel cost, just wait a week. But some of his conclusions are interesting in that they aren’t what I would have thought initially.”
Torrell figured that variable costs on the truck came out to 42 cents per mile, or $8,300 per year. Tires came out at three cents per mile, repair and maintenance to 12.5 cents per mile. Fixed costs were .5 cents per mile on license and tax, three cents per mile for insurance, 6.5 cents on interest and 15 cents on depreciation per mile.
With the purchase of the smaller truck for $6,000 Torrell could save the four-door truck for pulling the trailer. “Whether he drives it or not the annual fixed costs stay the same at about $5,000,” said Paisley.
Torrell also ran the spreadsheet with different miles driven per year and their affect on cost per mile. “It costs him 67 cents per mile driving 20,000 miles per year, going up to 25,000 miles the cost drops to 62 cents per mile. Dropping down to 10,000 miles per year brings the cost per mile up to 90 cents,” said Paisley. “You’re spreading the fixed costs over fewer miles and the operating costs per mile go up if we’re driving the vehicle less.”
Next Paisley outlined the influence of miles per gallon on costs per mile based on four-dollar diesel. “If we’re getting 15 miles per gallon it’s 67 cents per mile, at 20 miles per gallon that decreases to 60 cents per mile. Ten miles per gallon, like in a loaded trailer situation, increases costs to 80 cents per mile,” he explained.
“The price of fuel doesn’t affect the total cost as much as I would have originally thought,” said Paisley of other variables affecting total cost per mile. “That was the interesting thing to me. We’ve got so much built into fixed and overall costs on that vehicle that it’s not as influenced by fuel prices as you might think.”
“So was the small Toyota truck worth buying for $6,000?” asked Paisley. “Even if you drive the four-door pickup only 5,000 miles per year you’ve still got the $20,000 purchase price, and fixed costs stay the same and the dollars per mile jump up dramatically at only 5,000 miles per year to $1.36 per mile for that vehicle. We also now own, insure and license two vehicles.”
“The economy truck, which would be driven 15,000 miles per year, gets 26 miles per gallon. The total cost per mile on that truck is 34 cents, which is dramatically less than the four-door diesel, but we still own it and we need both of them around,” said Paisley.
Following the spreadsheets through to the end costs brought Torrell to his decision point. “The first total for the four-door truck cost about $13,000 per year to run. Based on the fixed costs for both vehicles and the improved gas mileage, the annual price was driven down to $11,900, or about $1,400 in savings per year,” said Paisley. “There are some cost savings associated with having the second vehicle, but not as much as I would have thought. If you could buy that same smaller vehicle for less than $6,000, that would be another decision point to look at.”
Paisley called the $1,400 in savings an opportunity cost. “There’s a convenience factor. If you’ve got one vehicle with your toolbox, winter clothes, towrope, jumper cables – are you willing to buy another vehicle and transfer that back and forth or insure another vehicle? There’s a decision to be made there. In Ron’s case he decided he liked to drive the four-door vehicle and he’d do some other things to reduce cost and get at the $122 per month in other economies.”
To reduce costs in other ways Torrell weighed his trailer and the equipment he keeps inside and replaced some with lighter versions. He also now keeps a scoop shovel in the trailer to remove 200 or 300 pounds of manure from the trailer after he gets done hauling cattle.
Paisley said the data shows that when you let a vehicle idle for 30 seconds it uses as much fuel to equal starting the vehicle. “If you’re going to idle more than 30 seconds just shut it off and you’ll save some gas rather than letting it idle 10 to 15 minutes,” he said.
Keeping RPM’s under 2,000 also saves fuel, according to research. “Ron drove the three-hour trip to Reno at 60 miles per hour, keeping it under 2,000 and got 19 miles per gallon, which was a 20 percent improvement. The question is if that’s worth doing all the time,” said Paisley.
Torrell also took a few other measures like adding extra mirrors to his trailer to reduce idle time when hooking it up and he now back hauls firewood for his cow camp when he drives the 150-mile round trip to work cattle.
Paisley said other options are moving from caking every day to three or even two days a week. “It isn’t going to impact performance any by doing it two or three days a week, from a nutrition standpoint,” he said.
He said to also consider alternative ways of delivering mineral, like using a four-wheeler instead of a truck, and putting pressure-release vacuum caps on fuel tanks and keeping them painted a light color and shaded.
To obtain the spreadsheets used in the presentation contact Steve Paisley at 307-760-1561 or firstname.lastname@example.org. Christy Hemken is assistant editor of the Wyoming Livestock Roundup and can be reached at email@example.com.