Operating in the industry of retail fuel supply is challenging. The market is unstable, prices are always changing and competitors are around the next corner. How can you get the best fuel value for your business?
A fuel supply and risk marketing manager can help. Many factors affect fuel pricing and it is their job to understand the relationship between local and global markets. They analyze conditions through different pieces in a four-step process:
- Follow Global Fuel Markets – How is the supply and demand in other countries? What conditions or events (such as economy, politics, conflict or natural disasters) are taking place that will affect prices?
- Look at Futures Markets – A market where contracts for future delivery of assets, such as diesel, gasoline and crude oil, can be traded. How has the global market affected the local trading price range of these fuels?
- Evaluate Prices – Based on how these fuels trade, where will their prices go, from top to bottom, in both the short term and in the long term?
- Look at Historicals – How do past prices and those from this year compare to the price difference between local and global markets? For example: The global market price of Oil ‘X’ is at $3.00. If the local market price is lower, then there is extra supply. If the local market price is higher, then there is a minimal supply.
Once the information has been assessed, the supply and risk marketing manager can predict if prices will go up or down and can also determine what are good prices to buy and sell. Purchasing fuel is all about timing – when the price is good, it will be bought in large volumes (1 million to 2 million gallons) and stored until prices go up. This cost-saving approach will then be passed along to you, the customer.
A good fuel distributor will have a supply and risk marketing manager who is experienced and can advise customers based on their individual needs. Working with you through planning, budget forecasting and applying fixed pricing strategies, will make it easier to take advantage of market fluctuations. You will be able to make smart purchasing decisions with confidence, knowing you are getting the best value for your business with less risk and more potential for gain.