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Senior Advisor

Are You Locking In Fuel?

In the past, I've made good money by locking in the next years fuel prices sometime in the Dec-Feb time frame.  This year, I''m not so sure about that.  I'm beginnging to think I will buy hand to mouth for a while until prices firm up.  Discussions on the future of crude prices are all over the place, but prices as low as $35 are mentioned.  Even if the low price is $50, that would pressure fuel prices.

 

Of course, gasolien has gone down a lot harder than diesel.  Does that mean one should lock in diesel prices if they are attractive?  I don't think so.  I am not a fuels guy, I just buy it and burn it.  But it seems logical to me that prices will continue to settle for a bit.

 

How hard they turn around and when are questions that one will have to watch closely.

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16 Replies
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Veteran Advisor

Re: Are You Locking In Fuel?

Last week I was quoted 2.55 for June, July, August delivery. Think I'll wait till January and check again. I don't have storage for semi loads so I'll probably fill my tanks and contract the rest. Probably in January or february
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Honored Advisor

Re: Are You Locking In Fuel?

This dip is meant to squeeze the newfound fracking supplies out of profitability.
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Senior Advisor

Re: Are You Locking In Fuel?

That is one explanation.  Acting on that, would you lock in fuel now or play it day by day?

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Honored Advisor

Re: Are You Locking In Fuel?

Jim, our fuel usage is not very great, so I do not really look to lock in pricing...perhaps I should, though. We ain't seen nothin' yet....

I think that a smart guy like you will keep his ear to the ground, and let us all know when the frackers start shutting down, due to inability to keep drilling for oil that is too cheap. It will keep going down until Big Oil can break the frackers' back. Then prices will rise like a homesick angel.
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Senior Advisor

Re: Are You Locking In Fuel?

From what I've heard about fracking, the fields don't produce long so new wells need to be drilled.  The current well is a sunk cost ( pun intended) so they can go ahead an pump until they run out.  The deal will be whether they can afford to drill new wells.  That's what little I know.

What puzzles me is that when the price goes back up, fracking will be profitable again.  So what is the long term sense in shutting them down for a while?  I'm not smart enough to understand all of this.

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Veteran Advisor

Re: Are You Locking In Fuel?

Kinda like  shutting the bin door when grain prices get too low.  You want to hold the product, be it grain, or crude, or whatever, off the market till the price is at a profitable level.

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Honored Advisor

Re: Are You Locking In Fuel?

I think it is like fraling with a badass rooster. Our then feed rep, who majored in poultry science, told us to get a five - gallon bucket of water, grab him by the neck, and hold him under, " ...until he almost gives up the Ghost." Scared works on investment capital types, too....
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Honored Advisor

Re: Are You Locking In Fuel?

An old high school ckassmate eho follows things better than I do tagged me in a FB post today, on this very subject. He says $57 a barrel is starting to put the screws to Putin. Probably....
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Advisor

Re: Are You Locking In Fuel?

No. I'm still setting full of 3.40 fuel i contracted a year ago for the year end expense. I'm such a genius. https://www.youtube.com/watch?v=NoptofKbQ04

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