~ Seeking Your Opinion on a Fuel Price Guarantee Service

Very good points gokiddogo,

That's why I am asking for feedback.

Op are you aware the bulk of trucks on the road, fueling at truck stops, are not paying the posted price? The discount is often 0.40 or more off the posted price. I think you need to read up more on card lock vs retail diesel prices, this should also give you a better idea who your target customers will be.
This does not matter much, since I am not selling the fuel.
If fuel price today is at $4, means truckers will buy it at $3.6 (based on discount you mentioned above).
If after a month it went up to $5 , truckers will pay $4.6, This is still $1 difference from $3.6 .
I am paying only the difference.
The reason I use the public prices is to make both sides use the same pricing scheme. This is how it can be fair to both sides.
It is also to easier pull history prices and build my contract prices based on that.


Other than that I think your idea is kinda shifty. Maybe if you were an established financial institution, not someone thinking about firing up a futures/options business. If you are going to charge 0.03 a gallon for the right to buy diesel at today's price any time within the next year or however long the contract is, you must be pretty confident the market price isn't going to average a higher price than the 0.03 you charge. If it jumps by .20 how do you plan to pay out your net .17 loss? Your money will run out fast, looks like to me at least.
I understand the point I'm not an established financial institution. Which is a valid point. I'm not one. I think I can move faster this way.
I cover each contract with its Option( s) . The $0.17 loss will be taken from the Option liquidation when you ask for the difference.

 

Thanks for feedback Long FLD.


So you’re not offering any sort of discounted price.
That's correct.

You only want me to pay you just in case the price goes up?
Yes. That's what the contract covers. Fuel Price increase.

I’m not following what the purpose is of paying you and rolling the dice on if it will go up or not.
To be honest, if fuel price changes does not bother you, then this service is not useful for you.

Seems like you’re hedging your bet on the price going down after I’ve paid you hoping the price goes up.
Not exactly.
If prices stay low, no issue for me.
If prices go up, I get your payment from an Option that covered your contract.

Currently today in Nebraska my price is 51 cents below the posted price, so technically I could pay you for your insurance based on the pump price, and once the price goes up I could still be purchasing fuel for lower than the advertised price only then I’d also be able to start chasing you down hoping to get the money you owed me because the price went up.
Let's say today posted price for Diesel in Nebraska is $4.0 . This means you pay $3.49 today.
If Diesel went up to $6.0, you will pay $5.49 (given 51 cents discount).
The difference between $4 and $6 is the same $3.49 and $5.49 which is $2.
You can take these $2 per Gallon to buy fuel from your preferred gas station.
You will not chase me down.
If the price goes up, You will claim your contract. I will liquidate the Option covering it.

 

Ha,
If my Dr doesn't yell in my face next time. Concorde

 

I understand that gokiddogo,

This is way more complicated than it is worth.
I was answering every question I got from everyone. This is how it would work.
Anyways, you are not supposed to worry about Option buying, pricing, etc.
You just buy the Insurance Policy and Claim it if prices go up.

Where were you when the price swung negative there for a while lol
Agreed.
For ref. Here is a chart of last 5 years Prices.



Thank you for your feedback.