How Do You Make it Cold? You cannot control the weather, but you can control the impact the weather has on your business. There is an old joke about some guys sitting together talking about their “best” insurance scam escapades that ends with the line, “So, how do you make a flood?” (If you don’t…
All the planning in the world cannot help you sell more gallons when Mother Nature does not cooperate. This past winter was unseasonably warm, and while the savings on overtime pay were a plus, making fewer deliveries was less than ideal for your bottom line. When winters are warm, temperatures are what affect your sales.…
HEDGE, HEDGE, HEDGE. There is an aphorism in the academic world that says, “publish or perish” in reference to advancing a career. Our aphorism is Hedge or Perish. Customers want and need some price certainty. Capped prices cost more to hedge (generally in the form of an option premium cost) but provide far more…
For the past 30 years companies have been offering pricing programs (fixed and capped), to give their customers peace-of-mind, maximize company sales margins, and minimize customer attrition. The methods to offer caps usually centered around a combination of Merc-related hedges, often locking in “supplier diffs”, and sometimes using physical inventory and/or weather hedges. The key…
Weather hedging. It’s a concept that many fuel dealers have heard over the years but relatively few have fully explored. In short, weather hedging for fuel dealers can best be described as a method to recoup some level of the lost fuel delivery and service profitability that otherwise would have been earned in a warmer…
There are several situations occurring now that we haven’t seen in a long time (maybe not ever), and they are leading to some questions that need to be addressed – now! Russia/Ukraine Iran/Venezuela Supply shortages Basis Blowouts Empty storage tanks Rising interest rates High Inflation Confusing messages from political leadership Severe backwardation in the futures…
Is a “steady basis” a thing of the past? Will it return to normal? When might it happen? What if my supplier doesn’t offer me a fixed diff? What if I don’t want one? All of these questions are “top of the mind” as we plan for next winter. Visit us at our EEE booth…
On the last day of 2021 the price of WTI crude oil futures closed at $75/bbl. About 10 weeks later, the price had risen to over $90/bbl., and then just 10 days after that, prices traded over $130/bbl. In a 10-day period in February, ULSD futures rose from $2.85/gallon to over $4.50/gallon, an increase of…
Though usually not at a loss for words, what has happened in the past week defies logic and almost defies reality – except that it actually happened. We know the impetus – almost entirely the Russian invasion of Ukraine, along with “supporting actors” of Iranian nuclear talks, supply chain disruptions, interest-rate movements, and several “political…
As you all know, weather can dictate how profitable your company will be during the season. Some of you may already be familiar with weather hedging programs and may even have implemented them into your company’s strategy. While we still see many companies with misconceptions about weather hedging, the main source of this misunderstanding stems…
