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Author Topic:   Survey Based on Speculation About Fuel Prices
GAwhale posted 05-06-2009 07:11 PM ET (US)   Profile for GAwhale   Send Email to GAwhale  
If you could, would you lock into today’s fuel price on all the fuel you will use on your Boston Whaler and tow vehicle for the next two years?


I work in the air line industry. We are hyper sensitive to the price of fuel. First quarter of 2009, we were hammered by fuel hedging contracts signed earlier. We were asked a similar question to the one stated above in a meeting yesterday. The general consensus was, “Yes you should lock in”. The feeling was that that the economy is going to get better, but we will have record inflation including rising fuel costs.

jimh posted 05-06-2009 07:54 PM ET (US)     Profile for jimh  Send Email to jimh     
To answer your survey question directly, I think fuel prices will rise in the future.
David Jenkins posted 05-06-2009 09:23 PM ET (US)     Profile for David Jenkins  Send Email to David Jenkins     
Is there a way for individuals to lock into fuel prices (or pay for fuel in advance) the way that airlines do?
Plotman posted 05-06-2009 11:07 PM ET (US)     Profile for Plotman  Send Email to Plotman     
Yes. If you have a brokerage account and are cleared to trade futures, you can buy unleaded gasoline futures. You can structure a trade such that, while you would pay higher prices at the pump, those higher prices would be offset by the profits you make on your futures position. If prices go down, your savings would be offset by your financial losses on the futures position.

What makes it kind of difficult for the individual, is that the contract size is 1000 barrels, or 42,000 gallons.

hauptjm posted 05-06-2009 11:09 PM ET (US)     Profile for hauptjm    
David, you can do it the same way the airlines do it (somewhat): futures contracts. If you have a clear estimate of the amount of fuel you will consume over a period of time, then you would simply buy the appropriate size contract at today's price, and exercise or sell said contract at some point in the future, at a gain. You'd still be paying the current price for your gas, but the proceeds from closing the futures contract would offset/reduce your pump price increase.

Of course, there is one huge factor in making this work...are you correct in your estimation of what the price of oil will do over said period of time. There's the rub!

Personally, I'm not yet convinced what the price of oil is going to do over the next 6 months, much less a year or so. Right now, my neighborhood filling station is charging $1.93 a gallon (regular unleaded). That's up from about $1.86 last month.

hauptjm posted 05-06-2009 11:11 PM ET (US)     Profile for hauptjm    
Sorry for the duplication, Plotman apparently types faster than my hunt and peck method.
BigDaddyWhaler posted 05-06-2009 11:43 PM ET (US)     Profile for BigDaddyWhaler  Send Email to BigDaddyWhaler     
All I know is, when gas was almost $5 a gallon, I filled up my 25 Outrage. That's right filled up. 140 gallons. I spent a week of fishing and burned it all up. I would've hate to have filled it had most of sit.
PeteB88 posted 05-07-2009 01:01 AM ET (US)     Profile for PeteB88  Send Email to PeteB88     
Gas went up about .25 cents today, I think I paid $2.25 - I saw the first 2 on the pump and averted my eyes and pulled the level. We're gonna get screwed again this summer - sucks- i will use the boat less than planned. Probably use the trust 11.5 and the kayak. And the float tube. And the bicycles. I have about 25 bikes.
deepwater posted 05-07-2009 06:32 AM ET (US)     Profile for deepwater  Send Email to deepwater     
I would not lock my self in to any contract for fuel unless it contained a clause that i would always pay the lower price should fuel go down,,just like home heating oil,,so if you check with your local heating oil provider they may sell off-road gas and you might save some money
R T M posted 05-07-2009 06:49 AM ET (US)     Profile for R T M    
I had a friend, a lawyer from Cleveland, who was heavily invested in oil futures back in the late seventies. He lost everything he had, including his home and large law practice. He moved to Florida, and got into a small business repairing golf carts to make a living.

rich/Binkie

GAwhale posted 05-07-2009 08:56 AM ET (US)     Profile for GAwhale  Send Email to GAwhale     
http://www.futuresmag.com/cms/futures/Templates/website/PrinterFriendly. aspx?%7BB3A00E51-D749-4A9A-8E2A-109E27BA7320%7D

Since the above article was written Southwest Air Lines (the air line that could do no wrong) has lost money in three consecutive quarters. No one saw the drop in gas prices from $4 a gallon to $2 coming.

The air lines blame speculators. People that don't even use the oil they buy for driving up prices. You have to admit there was a sense of hype driving up prices and giving Exxon record profits.

wjsherid posted 05-07-2009 10:29 AM ET (US)     Profile for wjsherid  Send Email to wjsherid     
All I have to say to this is that I am really excited to get my Montauk out on the open water full throttle to get rid of that really expensive fuel I have in the tank from last summer and replace it with the cheaper stuff.....I hate that expensive fuel. :-)
Tohsgib posted 05-07-2009 11:43 AM ET (US)     Profile for Tohsgib  Send Email to Tohsgib     
This is a dead cat bounce on oil prices. I think you will see oil range from $40-65/barrel over the next few years.
GAwhale posted 05-07-2009 11:56 AM ET (US)     Profile for GAwhale  Send Email to GAwhale     
Just for comparison: The price of a barrel of oil is $57.50 right now.
Buckda posted 05-07-2009 12:12 PM ET (US)     Profile for Buckda  Send Email to Buckda     

There are a few groups trying to make this happen right now, but as far as I know, none are actually operational yet. The idea is that you pre-buy the fuel at today’s price and use a debit card that adjusts/offsets the price of fuel at the pump.

I also saw something about this early last year. A cooperative in MN was working to provide the same – you received a debit card that adjusted the price at the pump, then swiped your credit/debit card to pay for the fuel you used. Your account was adjusted on the back end.

So, if fuel was pre-purchased at 1.50/Gallon, and your local station had it at 3.00/Gallon, you’d swipe the card and the pump would dispense fuel for $1.50/gallon. Your pre-paid “account” would kick in the initial 1.50/gallon and you would pay the difference on-site with a debit/credit card.

Being a person who keeps meticulous records regarding fuel use, purchase price and mileage at every fill-up, I believe that this could work well for me, as I buy more than 2,000 gallons a year for my truck alone.

Here are two sites that are working on this for a national level project:

https://www.mygallons.com/index.html

http://www.fuelbank.com/gettingstarted.htm

Dave

hauptjm posted 05-07-2009 12:44 PM ET (US)     Profile for hauptjm    
"kinda pregnant!" That's the version of the Airlines and they're "we want protection" from the speculators (evildoers). But, realize without the speculators they (airlines and everyone else) won't/can't have a futures market to operate in. Hence, GAWhales comment:

quote:
The airlines blame speculators. People that don't even use the oil they buy for driving up prices (evildoers). You have to admit there was a sense of hype driving up prices and giving Exxon record profits.

I'll agree there was A LOT of hype driving prices up last year from just about everyone concerned: government, producers, OPEC, speculators, etc. However, be very careful of the slippery slope to constraining an open market. Remember, open, free markets are very inefficient over the short term, but are equally very efficient over the long term. Poo-pooing the speculators is an extremely idiotic way to placate your shareholders for bad investment decisions. The very folks that create the market for these futures should not be blamed. Instead, "man-up" to your shareholders and do what everyone else does when they can't read the tea leaves perfectly: move on to the next trade. No one expects anyone to be perfect in every business decision. If they do, then they need to do some mirror watching.

Even though this comment comes from a "speculators" viewpoint, it is an absolute to the health and welfare of a ready market:


quote:
But Chatterton emphasizes the fundamental importance of speculators, saying “the liquidity and the price discovery that a speculator provides is essential for the marketplace, and that’s true whether it’s jet fuel or any other commodity. By limiting speculative capabilities in the U.S., that capital will look for investment opportunities somewhere outside of the U.S. where we have little hope of monitoring that situation.”
20dauntless posted 05-07-2009 12:48 PM ET (US)     Profile for 20dauntless    
Between boats and cars we probably burn around 4,000 gallons of gas a year. I would happily pay up front to lock in a todays prices. Last summer I was paying ~4.50 a gallon in the US for gas on the water and ~6.00 a gallon in BC. Not fun, but it's better than not using the boat.
hauptjm posted 05-07-2009 12:55 PM ET (US)     Profile for hauptjm    
Not to be a downer, but how would it go over if you bought your option to buy this summer or even next year at $2.20/gal., and the market price this summer (or next) drops to $1.50/gal.? Your fuel cost would be 47% over market and you would loose whatever premium cost you paid for the option, because it would expire worthless.

There's always two sides to every trade.

20dauntless posted 05-07-2009 01:26 PM ET (US)     Profile for 20dauntless    
Buying fuel options in advance could certainly come back to bite you in the a**, but I think that fuel prices will probably go up throughout the summer. They will not reach the same levels that they did last summer, but they'll be higher than they are now. And once the economy recovers, fuel prices will go up even further. Just my $.02...
pglein posted 05-07-2009 02:10 PM ET (US)     Profile for pglein  Send Email to pglein     
deepwater,

First, home heating oil is essentially diesel, but is generally more expensive than untaxed, off-road diesel, which is perfectly legal for use in boats. But using untaxed gasoline in your boat would not be legal, as the laws are written differently for gas than diesel. I'm actually not aware of any "untaxed" gasoline, only sales-tax refunds at the state level (here in Washington) that affect commercial fishing vessels only.

deepwater posted 05-07-2009 06:45 PM ET (US)     Profile for deepwater  Send Email to deepwater     
there is also an off road gas ,,i mentioned the heating oil company because some also deal in gas for off road use
hauptjm posted 05-07-2009 08:36 PM ET (US)     Profile for hauptjm    
It seems you couldn't get more off road than in a boat!
GAwhale posted 05-20-2009 05:31 PM ET (US)     Profile for GAwhale  Send Email to GAwhale     
Oil ends up more than $60 for first time since November
Oil settled at more than $60 a barrel for the first time in more than six months after a government report showed stockpiles shrinking, news media reported. Oil closed at $62.04 a barrel, up $1.94, the highest price since Nov. 10.

L H G posted 05-20-2009 05:42 PM ET (US)     Profile for L H G    
I just saw premium gas for $2.90 here in Chicago.
Dan posted 05-20-2009 06:28 PM ET (US)     Profile for Dan  Send Email to Dan     
I paid $2.87 yesterday, there are some cheaper places further away. It's a racket.
soggy bottom boy posted 05-20-2009 09:04 PM ET (US)     Profile for soggy bottom boy  Send Email to soggy bottom boy     

Gas prices will rise over the next few years. Growing demand, and declining traditional supplies.

Hate to sound like a conspiracy theorist, but I can see the consumer getting "shafted" this summer. Per litre prices hit 92.3 today in Ottawa. Economy sucks, but hey, warm weather is upon us!!!Wait until the end of June when elementary school is out, we will be paying big. I am driving the wife's Altima every chance I get, rather than my Expedition.

Soggy.

TransAm posted 05-20-2009 10:09 PM ET (US)     Profile for TransAm  Send Email to TransAm     
$2.25 @ Costco today
rborroto posted 05-24-2009 09:00 AM ET (US)     Profile for rborroto  Send Email to rborroto     
The cost of gas is one reason I downsized to my '09 BW 130 Super Sport (in addition to simpler boating). I go all day with 4 gallons of gas with a 40 HP motor. Forget the Smart Car, get a smart boat.
R T M posted 05-24-2009 09:32 AM ET (US)     Profile for R T M    
rborroto, I`m with you. 13 footers are the way to go, and just as much fun, and cheaper to insure. Leave some of the friends behind, let them get their own boats. Who cares about the cost of gas, three or 4 gallons a day on the water, and I tow it with a Pontiac Vibe, 35mpg on the highway, 29 mpg when towing. The care free simple life is more fun.

rich/Binkie

Mr T posted 05-28-2009 02:14 AM ET (US)     Profile for Mr T  Send Email to Mr T     
I don't know about you guys but here in Nor Cal, we are now up to 2.63/gal for mid grade. I coud care less about what I pay for boating because it is my escape from reality. Don't get me wrong; I hate paying a lot. But, and this is a big but, when I am on the water, I do NOT CARE what it cost to fill the tank once out there. If it keeps me from suckng on a tailpipe when I get home it was a bargain.

As far as I am concerned, I will not be woriied about fuel costs, because in the grand scheme of things, they are a minor part of the equation. C'mon, get real; what did you spedn to get to the water in the first place? We don't do this for profit; we do it because we love to be on the water in the boat. Gas is cheap when put in that context.


That said, anyone who thinks the price of oil and gas will do anything but go WAY up in the next few years is naive.

It's a new world order kids; we are being remade in the image of Europe, thanks to the new administration; get used to it.

For some odd reason, most people seem to be ok with it too; that scares the cra@ out of me.

New 2 Whalers posted 05-28-2009 08:57 AM ET (US)     Profile for New 2 Whalers  Send Email to New 2 Whalers     
Now those morons in D.C. are floating the idea of a value added tax of 20 - 25% on everything similar to the one in Europe, and no income tax offset:-(

These people scare the daylights out of me. I'm glad to be an old geezer who won't be here to see the end of the U.S. as we know it.

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