Benefit No. 2: Better Forecasting When you commit to a fuel price contract with a fuel
seller, you can expect to avoid any unforeseen costs in- crease and can help protect your operating cost metric. A fuel contract might take more work and expenses on
the front end, but it can help you save significantly on future fuel prices in a market that is constantly changing.
Conclusion School districts and bus companies that consume
large volumes of fuel and do not investigate the variety of fuel contracts for a percentage of their fuel costs gen- erally believe one of the following: 1.
favorable market changes.
3. The district/company is confident that fuel prices are going to fall, and it is comfortable paying a higher price for fuel. In fact, that type of analysis proves all too often to be incorrect.
Use this article for an interesting and potentially worth-
while discussion with your fuel suppliers. Ask them for an opportunity to learn more details and explore the options they may have for supplier price and delivery contracts that best suit your school year fuel needs. Be cautious. If the fuel supply market is highly volatile,
The district or company can pass on any and all increases in fuel prices to their taxpayers/custom- ers, without a negative impact on their operating cost performance metric.
2. A downside of using fixed supply and price for- ward contracts is missing favorable fuel market cost reduction movements. One of the main risks of using a forward contract is the potential to miss out on favorable cost reductions. Once you lock in a rate, you must trade at that rate, despite any
a fixed forward contract can provide stability. However, in a stable or strengthening market, you might benefit more from spot transactions or more flexible options available from your fuel supplier. Your fuel distributors wholesale supplier, oil compa-
nies and others all have sales departments dedicated to these methods of selling fuel. ●
Robert Pudlewski is STN’s technical editor and a member of the National School Transportation Association Hall of Fame in recognition of his 40-plus-year career as a school bus maintenance, technology and procurement expert.
www.stnonline.com 53
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60
