Prudent companies take steps to manage risk in virtually all aspects of their business. This involves taking control of as many variables as possible. However, most businesses are spectators when it comes to fuel prices. They pay the market rate.
Volatile or high fuel prices place risk on profitability. In the past, only large, high volume fuel consumers could control their fuel price. Today’s tools change all that. There are numerous hedging programs which can be tailored to meet your individual business goals. These tools can protect your budget, improve cash flow, and give you a competitive edge in the market. These tools should be viewed as insurance. They are not designed to predict the market or used as a money making program.
Each program is custom designed to address your business situation factoring volume, time horizon, risk tolerance, and budget. The most common programs are:
Fixed Price Contracts guaranteed supply and price for specified period. They are an excellent, simple hedge against rising fuel prices.
Cap Program allows customers to buy fuel at the market rate which does not exceed a maximum over the delivery period. The customer can enjoy benefit of buying at a lower price, but never pay more than maximum should prices increase.
Collar Program establishes a maximum and minimum price a customer will pay over the delivery period. Customers pay the current market price; but will not pay more than maximum nor less than the minimum over delivery period.
Your PetroLiance fuel sales representative can discuss how these programs may be incorporated into your business strategy. PetroLiance will handle all of the financial instruments that seem to make these programs confusing and intimidating. With PetroLiance managing your fuel program, you can focus your energy toward growing your business.