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Senior Contributor

Probably a stupid economic idea but

It's too bad that you can't lock in a gasoline price with gas station.  I wonder if that would have a positive or negative effect?  You know, at some point in the year you see the price of gas is where you think it's good.  You plunk down your money and buy enough to run you the rest of the year or some part of it based on the price currently listed.  You could buy at Shell or BP or whoever and it would be good at those stations across the US.

 

Just curious.  I know that you can buy futures but that isn't the same as what I'm proposing.  For one thing the quantity would be smaller for most people.

9 Replies
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Veteran Advisor

Re: Probably a stupid economic idea but

I would imagine if you had sotrage, you could do that now through a distributor but you would have to have storage.  Many farmers buy fuel that way don't they?

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Re: Probably a stupid economic idea but

There was a news story about a station doing just that a while back- I'm thinking in the Twin Cities.

 

Also thinking that maybe it didn't turn out well for them- whether they couldn't handle the intricacies of the hedge book customers welshed when the market went against them, other factors, I don't know.

 

 

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Advisor

Re: Probably a stupid economic idea but

Not stupid at all. You could buy one of the commodity oil etf's in whatever quantity you needed. Not an exact price match but it would approximate what you want to do. We've restarted the deflationary spiral now though, but it could be put back on hold at any moment.
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Senior Contributor

Re: Probably a stupid economic idea but

Not sure about getting large storage barrels for longer term storage of gas.   I've had a couple of motorcycle and small engine mechanics tell me that today's gasoline containing ethanol does not have a very long shelf life.   They said that since MTBE was removed from gas and replaced with ethanol that there are more problems with storage and quality.  I have not tried it but they said to fill a glass jar with ethanol and let it sit for a month and the gas will change colors supposedly due to contaminants in the ethanol.

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Veteran Advisor

Re: Probably a stupid economic idea but

Our local Cenex Co-op lets you contract fuel ahead of time, filling at the pumps at the station.  You have a 3-month period to use the fuel.  If you do not use all you contracted, you either have the fuel delivered to a farm tank, or pay the difference in price, if fuel is cheaper than you contracted.  If you contracted it, and the price went up, you can get out without penalty.  The contract time is per quarter, with the first quarter starting March 1st.  So, if you contracted 'spring' gas, you would have Mar-Apr-May to use it.  You can fill up at their station in 3 or 4 different towns.

As for storing ethanol fuel in a barrell, I have had that experience, by accident, as well.  Last fall, I had some fuel put in the gas barrell at the farm, with stabilizer in it (3 cents extra compared to fuel without).  We use a gas truck, and have a gas utility tractor here, so I figured we'd use it up through harvest.  Somehow, I thought my brother had emptied the barrel in the truck at the end of harvest, but he didn't, so while I was filling up in town, the gas was aging.  Anyway, as of right now, I am using 11 month old gas in an old IH truck, a Farmall 656, a Honda TRX300, a Polaris Xplorer 400L, a Kawasaki KLX 300, a Cub Cadet lawn mower, and a Stihl 031 chain saw.  All run fine, might be a little harder to start than 'fresh' gas, but no problems at all.  The barrel was filled with e-10 towards the end of October.  The barrel has a filter on it, and I haven't plugged it yet.  I don't know what it would be like if it wasn't stabilized, though.

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Veteran Advisor

Re: Probably a stupid economic idea but

I would think a little "Fresh Start" additive would help it a bunch.

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Veteran Advisor

Re: Probably a stupid economic idea but

Never used it, where does one find it?

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Veteran Advisor

Re: Probably a stupid economic idea but

Briggs and Stratton make it so I think most auto parts places probably carry it.  We always used it to put in the gas tank of the lawn mower for the winter instead of dumping the gas out.  Don't know what the amount per gallon would be though.

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Senior Contributor

Re: Probably a stupid economic idea but

I know at least UPI in Ontario has that service. Gasoline and Diesel.

Tied into Co-Ops and some of them offered locking price probably 15 years ago.

Can be used for bulk or at their cardlocks which are spread around Ontario.

Think a lot of trucking companies like it as well as a good number of farmers and even a number  of town dwelling consumers have used it.

There is a price of a couple of cents per litre to cover their costs of hedging the fuel.

We of course have to hedge our $ too to have a true hedge that covers changes there since the fuel is traded in New York?

Any way it has been available, if your supplier does not offer it check their competition as I would think someone should provide it.