Wednesday, June 18, 2014

The Iraq Turmoil and Your Fuel Cost Index

Unfortunately, the chaos that is taking place in Iraq at this moment, will play havoc with the cost of fuel. Rumors are spreading that we could see the cost of a barrel of oil rise to $116 per barrel. That would add .40 to $1.00 to fuel.

In my weekly radio show, "The Contractor's Corner" on Mondays at noon (EST) I announce the cost of gas and oil for the opening bell of the week. This way, contractors can adjust their fuel cost index for their estimates for future work. I would think with all of this turmoil in the middle-east, that index needs to be increased.

In other words, if you are paying $4.00 a gallon for diesel, you may consider an index of $4.50 to $5.00. The same consideration should be applied to gasoline. This covers you for rising fuel costs in your estimates.

You will also see increases in materials and transportation rise. Expect the same for these items, and consider placing an escalation clause in your proposals and contracts.

Since pricing varies from area to area, you must determine what rice increase is best for you.


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