Question on AVGAS stored at the field
"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
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