Question on AVGAS stored at the field

[Tman]

For any of you who might know;

When the owner is storing Avgas at the local FBO, do they bear the price
exposure for swings in the market prices of the fuel they have in
inventory, up or down? Or does the supplier (e.g. Texaco, P66) provide
a hedge for the fuel in inventory.

E.g. let's say you buy 1000 gallons at $4 / gallon, and it took you two
months to sell that off, over time the wholesale price of fuel increased
to let's say $5.50. Did you just make money by being able to charge
more for that slug of fuel sitting underground? And vice-versa --
losing money as prices come down (as they have just a bit now).

Or does your supplier provide price protection. E.g. by shorting some
futures that are correlated to the price of gasoline, then passing on
the hedge insurance to you.

Now, wrong group, but just in case anybody knows, what is the typical
practice for the same question at the typical auto fuel stations (car,
not plane, just to be clear)? Does the owner bear exposure to price
swings for fuel that is in inventory?

T

[The Bunyip Slayer]

"Tman" <x@x> wrote in message
...
> For any of you who might know;
>
> When the owner is storing Avgas at the local FBO, do they bear the price
> exposure for swings in the market prices of the fuel they have in
> inventory, up or down? Or does the supplier (e.g. Texaco, P66) provide a
> hedge for the fuel in inventory.
>
> E.g. let's say you buy 1000 gallons at $4 / gallon, and it took you two
> months to sell that off, over time the wholesale price of fuel increased
> to let's say $5.50. Did you just make money by being able to charge more
> for that slug of fuel sitting underground? And vice-versa --
> losing money as prices come down (as they have just a bit now).
>
> Or does your supplier provide price protection. E.g. by shorting some
> futures that are correlated to the price of gasoline, then passing on the
> hedge insurance to you.
>
> Now, wrong group, but just in case anybody knows, what is the typical
> practice for the same question at the typical auto fuel stations (car, not
> plane, just to be clear)? Does the owner bear exposure to price swings
> for fuel that is in inventory?
>
> T

One local automotive retailer told me he paid up front, and that was it. If
prices rise he gains, if it falls he looses. I think his margin was about 12
cents a gallon, and he was buying fuel about once a week. Obviously the
higher your volume, the less you would stand to gain or loose.

But that just one small retailer. Hard to say what others do. I think some
of the higher volume folks have long term contracts and agreements that
better stabilize their prices, and may even be based on their daily
inventory levels. Wouldn't surprise me. I have heard the airlines do.

[Bertie the Bunyip[_25_]]

"The Bunyip Slayer" <luv2^fly99@cox.^net> wrote in
:

>
> "Tman" <x@x> wrote in message
> ...
>> For any of you who might know;
>>
>> When the owner is storing Avgas at the local FBO, do they bear the
>> price exposure for swings in the market prices of the fuel they have
>> in inventory, up or down? Or does the supplier (e.g. Texaco, P66)
>> provide a hedge for the fuel in inventory.
>>
>> E.g. let's say you buy 1000 gallons at $4 / gallon, and it took you
>> two months to sell that off, over time the wholesale price of fuel
>> increased to let's say $5.50. Did you just make money by being able
>> to charge more for that slug of fuel sitting underground? And
>> vice-versa -- losing money as prices come down (as they have just a
>> bit now).
>>
>> Or does your supplier provide price protection. E.g. by shorting
>> some futures that are correlated to the price of gasoline, then
>> passing on the hedge insurance to you.
>>
>> Now, wrong group, but just in case anybody knows, what is the typical
>> practice for the same question at the typical auto fuel stations
>> (car, not plane, just to be clear)? Does the owner bear exposure to
>> price swings for fuel that is in inventory?
>>
>> T
>
> One local automotive retailer told me he paid up front, and that was
> it. If prices rise he gains, if it falls he looses. I think his margin
> was about 12 cents a gallon, and he was buying fuel about once a week.
> Obviously the higher your volume, the less you would stand to gain or
> loose.
>
> But that just one small retailer. Hard to say what others do. I think
> some of the higher volume folks have long term contracts and
> agreements that better stabilize their prices, and may even be based
> on their daily inventory levels. Wouldn't surprise me. I have heard
> the airlines do.


Bwahawhawhahwhahwhahwhahhwhahwhahwhahw!


Bertie

[BT]

Our local pumps are changed electronically, remotely as the price
fluctuates. Self Service
Chevron runs the pumps, I do not know if the "FBO" which is the local County
Dept of Aviation is charged anything. They could just collect a "fuel flow
fee" from the Chevron distributor for the volume pumped.

BT

"Tman" <x@x> wrote in message
...
> For any of you who might know;
>
> When the owner is storing Avgas at the local FBO, do they bear the price
> exposure for swings in the market prices of the fuel they have in
> inventory, up or down? Or does the supplier (e.g. Texaco, P66) provide a
> hedge for the fuel in inventory.
>
> E.g. let's say you buy 1000 gallons at $4 / gallon, and it took you two
> months to sell that off, over time the wholesale price of fuel increased
> to let's say $5.50. Did you just make money by being able to charge more
> for that slug of fuel sitting underground? And vice-versa --
> losing money as prices come down (as they have just a bit now).
>
> Or does your supplier provide price protection. E.g. by shorting some
> futures that are correlated to the price of gasoline, then passing on the
> hedge insurance to you.
>
> Now, wrong group, but just in case anybody knows, what is the typical
> practice for the same question at the typical auto fuel stations (car, not
> plane, just to be clear)? Does the owner bear exposure to price swings
> for fuel that is in inventory?
>
> T

[Mike[_22_]]

"Tman" <x@x> wrote in message
...
> For any of you who might know;
>
> When the owner is storing Avgas at the local FBO, do they bear the price
> exposure for swings in the market prices of the fuel they have in
> inventory, up or down? Or does the supplier (e.g. Texaco, P66) provide a
> hedge for the fuel in inventory.
>
> E.g. let's say you buy 1000 gallons at $4 / gallon, and it took you two
> months to sell that off, over time the wholesale price of fuel increased
> to let's say $5.50. Did you just make money by being able to charge more
> for that slug of fuel sitting underground? And vice-versa --
> losing money as prices come down (as they have just a bit now).
>
> Or does your supplier provide price protection. E.g. by shorting some
> futures that are correlated to the price of gasoline, then passing on the
> hedge insurance to you.
>
> Now, wrong group, but just in case anybody knows, what is the typical
> practice for the same question at the typical auto fuel stations (car, not
> plane, just to be clear)? Does the owner bear exposure to price swings
> for fuel that is in inventory?

Most of the smaller FBOs around here pay up front for fuel and then charge a
set price until the next load. I have no idea how the larger FBOs operate,
but their prices are always much higher to begin with and they don't seem to
be influenced much by local competition.

[JGalban via AviationKB.com]

Mike wrote:

>
>Most of the smaller FBOs around here pay up front for fuel and then charge a
>set price until the next load. I have no idea how the larger FBOs operate,
>but their prices are always much higher to begin with and they don't seem to
>be influenced much by local competition.

This is how most FBOs do it. That's why you'll see big differences in
avgas prices between FBOs when prices are fluctuating. Low volume FBOs will
often have lower prices when fuel costs are rising, and higher prices when
they are falling. On my trip this summer, I used Airnav to find the best
fuel deals. Since fuel prices were shooting up, I ended up stopping in tiny
towns in the middle of nowhere to stock up on older (and cheaper) fuel.

Auto gas works a bit differently. Since the volume is much higher and the
profit margin is small (for the local retailer), they adjust their prices to
match the market price fairly frequently. I know a guy that manages a few
stations and these days he's on the phone to his wholesaler a couple of times
a day for price updates.

John Galban=====>N4BQ (PA28-180)

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[Mike[_22_]]

"JGalban via AviationKB.com" <u32749@uwe> wrote in message
news:88f7f69450ba0@uwe...
> Mike wrote:
>
>>
>>Most of the smaller FBOs around here pay up front for fuel and then charge
>>a
>>set price until the next load. I have no idea how the larger FBOs
>>operate,
>>but their prices are always much higher to begin with and they don't seem
>>to
>>be influenced much by local competition.
>
> This is how most FBOs do it. That's why you'll see big differences in
> avgas prices between FBOs when prices are fluctuating. Low volume FBOs
> will
> often have lower prices when fuel costs are rising, and higher prices when
> they are falling. On my trip this summer, I used Airnav to find the best
> fuel deals. Since fuel prices were shooting up, I ended up stopping in
> tiny
> towns in the middle of nowhere to stock up on older (and cheaper) fuel.

I'm still finding sub $5 avgas in many areas of the country, but you sure
have to plan carefully to make them convienient. KMDF has avgas for $4.22
and their mogas was $3.68 about a month ago which was cheaper than auto fuel
at the time. KHHF has avgas for $4.25. There's some good deals if you
search for them, but they typically don't last long when the prices are
going up. I'm looking for a downward trend soon.

[JGalban via AviationKB.com]

Mike wrote:
There's some good deals if you
>search for them, but they typically don't last long when the prices are
>going up. I'm looking for a downward trend soon.

Sometimes they last quite awhile if the airport is remote enough. Filmore,
UT is on my usual route from Phoenix to Montana. It's a barren airport with
no buildings except an overflowing port-a-potty. Their self serve pump has
been selling avgas for $4.42 since June. I stopped there last month because
my usual stop, 18 miles away in Richfield, UT (RIF), had gone up to $5.84. I
was surprised not to see any other airplanes stopping in for that kind of
bargain.

John Galban=====>N4BQ (PA28-180)

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