As we head into the busy summer driving season, one of the most talked-about topics in the vehicle reimbursement industry is the price drivers pay at the fuel pump. Fuel prices are rising more rapidly than we would typically see during the summer months. Some fuel price increases can be attributed to changing the winter fuel blend to the summer blend. According to an article written by The Association for Convenience & Fuel Retailing, the summer fuel blend is roughly 15 cents more expensive per gallon due to the increased production time and a lower yield of fuel while producing the summer blend (NACS, 2022). As fuel prices rise to a U.S. average of $4.60 per gallon, driver allowance and cents per mile programs can quickly become outdated with industry costs. Recent reports have indicated that fuel prices could reach nearly $6.00 per gallon in the United States.
How can a Fixed and Variable Rate plan (FAVR) bring certainty to your vehicle reimbursement plan?
For starters, A Fixed and Variable Rate (FAVR) Plan is an IRS Approved, Non-Taxable Vehicle Reimbursement Program. Each driver’s vehicle reimbursement is calculated based on a standard vehicle. There are two main components to a FAVR Vehicle Reimbursement Plan. Each vehicle plan contains a fixed rate which includes vehicle deprecation, insurance, license, registration, and property tax. Variable costs change every month based on monthly mileage. The variable rate consists of the cost of fuel, maintenance, and tires per mile.
When utilizing a FAVR Plan, Drivers and Plan Administrators are assured drivers are reimbursed on real-time fuel prices. At AutoReimbursement.com, we monitor nearly 150,000 fuel stations in over 44,000 zip codes across the entire United States. Every month, we provide real-time updates to drivers’ variable vehicle reimbursement.