Hedging fuel costs

Never bought futures but used to pre-buy 10-20K gal dropped at a couple of stations.

 

Used to be stations out west called Burns Bros. Owner was a family friend. Was bought at their price + .02 pump charge & taxes. They bought on futures, I paid up front and had "gallon credit" at certain stations. Trucks only ran west at that time so it was easy to have them fill up at those stations.

 

That's the way airlines buy fuel at certain airports. The airlines buy fuel contracts with future delivery to the fuel arm at the airport. A company at the airport, or sometimes the airport authority, takes care of the infrastructure and the airline pays the cost per gallon for fuel plus a small number of pennies (2-3 cents). I suspect big trucking companies operate in the futures and commodities markets since fuel is their #2 or #1 expense after people.

 

I only had 12-13 trucks back then, leased to Pirkle out of Madison. My actual cost was .20-.25/gal less than their discount, A lot of money when pump price was .90-1.10. But fuel prices were more stable then also.

 

Could you prebuy from a local heating oil dealership?

they do that with heating oil and propane.

I just bought 1500 gallons of propane take delivery before 4/1/24

 

That should work great ...until ya get caught with dyed fuel and evading fuel taxes.

 

No maybe they would do it with onroad ulsd ?

 

Finding a reputable fuel broker can be a problem. Fuel can be a fast paced hustle as far as trading goes and it attracts a certain kind of broker. Not saying they're all bad, just start out small and be careful. A lot of the job-lot brokers are also day traders and if you think there might be a conflict of interest there, you're right.
Futures, short term contracts with definite deliver-by dates, long term storage contracts and pump charges, house brand fuel from independent refiners, all these things will play into what your broker is charging you. As a rule, unless you're a major league player dealing in multi million gallon lots, all you'll ever see is a refiner's quality assurance report and the broker's bill. Unless it's aircraft fuel you're not going to see much paperwork of any kind except for the delivery receipt.
I know I don't have to tell you guys this but whatever you do don't front a broker any money. Pay on delivery and pay on delivery exactly to the terms of your contract. Nothing more, nothing less. Later, when everybody gets to know everybody else, you can play a little looser game but, like I said, fuel seems to have more than it's share of problem children.