Hello was wondering how many people are buying fuel on contract or thinking about it. We have looked at it a few times but this year looks like fuel is going to keep going up. We use around 30,000 gallons a year. I was told most people do not do a contract on gas because it changes so much. Thanks for any imput. Jason
I"ve done it in the past, may do it again this year but everyone I've talked to that you contract with requires you to take every gallon you contact by such a date, or else you pay and don't get the fuel, the problems we've had in the past are our fuel storage isn't empty enough to hold it all and they refuse to keep it even if I"d pay stroage on it at there facility. I've ended up buying more storage tanks to hold what I didn't have room for or rent tanks also. Its hard to judge how much you'll need at which month, things for me change quite often and they are not always the same from one month to the next, the year end totals are there but not always monthly. I've tried to look into a more flexable contract but nobody will do that around me. As for gas we don't do them around here, lp gas they do and I've had mixed feelings over that, last year nobody needed any and its a hot debate now as to who pays for undelivered lp gas that was contracted.
It is not a wise choice to do fuel contract for its price is not so stable.
I use a service called DTN to get a feel for commodity prices. For me selling wheat and beans, or buying corn, is done in quantities sufficiently large for it to make sense to subscribe to a service that projects future prices. It takes a fair bit of work to get used to the jargon and whatnot, but it is totally comprehensive, and you get several reports/day pertaining to whatever market you are interested in. They have daily commentary on Diesel fuel. Anyone using large quantities of it could likely make money paying attention to their analysis and recommendations. Most farmers subscribe to DTN. At least it will give you same information your supplier is using to set prices. It will give you the confidence to know that your buy/wait decision is based on something other than hope. www.dtnprogressivefarmer.com http://www.dtnprogressivefarmer.com/dtnag/common/link.do?contentId=70215&parentId=70032 I'm not sure if those links are any good. DTN websites are a bit tricky to figure out, till you subscribe. Then everything is right there. As far as contracting goes, it depends. If you can find a supplier that will book you a price without taking your money, then all you have to do is watch the local prices and book a portion of your future usage anytime the price is low. However, the energy(and fertilizer) sector likes to get paid up front for some reason. That only works for me when i'm flush with cash(almost never) But it still makes sense to take loads when its cheap. So you should be looking to do at least a tanker load maybe once a year when diesel consumption is at its lowest (probably winter) Fill your tanks then for summer. Thats what we do. Fertilizer is cheapest in the fall when nobody is applying any. That is a good time to fill the tanks for next spring. As far as fixed price contracting goes, they have to cover their risk and you pay for that. Nobody i know does this. There is no point in guaranteeing someone else makes money. You might as well do that for yourself and just fill your own tanks. The last lesson is you will NEVER beat the the markets. The best strategy is simply know what you need to buy it for, then watch the markets closely and buy when the price is right. I hope this helps Ken
I have done it in the past and came out good on it. As for this year, I think the horse is already out of the barn. When I did contract I usually did it as early in the year as possible.
I've done it in the past and did ok. My supplier requires 10% down when signing the contract and the rest due at delivery. I was going to do it this winter but my supplier said prices should soften in the spring. WRONG. :crying Guess I will have to pay retail for the year Thought $3 fuel was high in December, over $ 4.00 now. Wish I was double jointed so I could kick myself in the @rss.