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Locking in next year fuel prices.

Discussion in 'Lawn Mowing' started by O Turn Man, Oct 22, 2008.

  1. O Turn Man

    O Turn Man LawnSite Member
    Posts: 6

    How many of you book your fuel prices for the year in advance. I can currently lock them in from $2.36 to a high of $2.69 for 2009 through my co-op. What do you think?
  2. ed2hess

    ed2hess LawnSite Fanatic
    Posts: 13,192

    So this is like a futures market thing where you buy a certain amount of fuel at certain dates? A little more detail please.
  3. nosparkplugs

    nosparkplugs LawnSite Gold Member
    Posts: 3,445

    Unless your purchasing large volumes of fuel hedging fuel costs, is a volatile market, and risky. Here's a real world current example, folks in the north east were scared into hedging their heating oil costs last year, and now the fuel costs have dropped well below what they locked in, and their stuck paying more this winter. Be very careful hedging fuel costs, historically only large companies like the airlines, Fed-Ex, UPS have had the ability to hedge fuel costs sucessfully. Folks dedicate their whole careers to the fuel hedging industry, again more power to ya IMO it's not worth the risk.
  4. brandtb1

    brandtb1 LawnSite Member
    Posts: 153

    How many gallons do you use per week? I would think of locking in the rate, because if we get another hurricane or something else, prices will go up. I hope I am wrong, but I do not see gas dropping lower than $2 per gallon ever again. Right now everyone is happy that it is below $3 and that seems like a good deal, but the gas companies got us trained to think $2.50 is a great deal. Gas always goes up in the summer when people drive more and use more, so a lock in does not sound bad to me. If I am wrong and gas drops to $1.50 next summer, and you use 100 gallons a week, you will pay about $89 more per week. If it goes up to $4, you would save $131 per week. I would take the gamble, but it is a gamble unless gas goes to $.99 per gallon, but I do not see that happening.
  5. IN2MOWN

    IN2MOWN LawnSite Platinum Member
    Posts: 4,993

    In another thread some guy from Arkansas said he paid $1.99 for gas.

    Im about .30 cents away from that.

    TJLANDS LawnSite Bronze Member
    Posts: 1,669

    I beleive gas prices for reg unleaded will go below 2.00 and stay there while
    the world battles this recession. I think 1.25-1.50 will be the bottom. Think hedging is a bad idea, very risky now.
  7. O Turn Man

    O Turn Man LawnSite Member
    Posts: 6

    I am looking at around 2000 gallons for the year. The year before I averaged $2.69 per gallon. This year will be close to $3.60. We are currently at $2.39. Our lowest price was $1.99 in early January. If fuel drops another thirty cents, I am going to lock it in. This will guarantee me that my fuel prices will be cheaper than the last two years. I can live with that.
  8. nosparkplugs

    nosparkplugs LawnSite Gold Member
    Posts: 3,445

    I could not agree more, there are business or consumers heating oil hedgers who have lost thousands hedging fuel costs in this market, unless your a high roller, high dollar company, your going to loose hedging fuel costs. Do you guys burn that much fuel??? most real hedgers are spending millions on fuel costs, no disrespect our fuel usuage is minimal in the global fuel hedging that goes on daliy, the average business does not benefit
  9. Sounds like a good idea to me. OPEC has already said that they will be cutting production after their next meeting. They are probably more responsible for our current economy problems than anything else. When money that was previously spent to pay house payments had to go for higher gas prices just to get back and forth to work..
  10. IN2MOWN

    IN2MOWN LawnSite Platinum Member
    Posts: 4,993

    They can cut prodcuction all they want. The key is for Americans to keep the demand down like we have been doing. Not get so complacent about finding alternatives. Keep buying the motorcycles and the moped, keep carpooling and using the bus. Show OPEC and the middle east that we can survive without burning the large amounts of fuel we were burning before.

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