"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.