Saving money on fuel

Washington Ag Today February 3, 2010 One way to save on fuel costs may be to lock in prices. Tina Hampton, Supply and Risk Marketing Manager for R. E. Powell Distributing Company in Grandview, Washington, says the most simple way to do that is with a fixed-price contract.

Hampton: “And what that is you can lock in a specific volume of fuel for a period time at a specified price. For the next 12 months out you can take any single month or you can lock in several months at a time. Today for example you could lock in a fuel cost delivered in if it was dyed fuel, for somewhere are the $2.40, $2.50 area. That might seem a little bit high compared to today‘s price but most companies do not have a fuel storage tank that can take advantage of putting that fuel in the tank today to capture today‘s price. But by the time we get to the September period chances are that more than likely prices could be substantially higher than they are today. So this is a nice way to lock in a price that you know you won‘t pay anymore for you fuel and you apply that against the rest of your business expenses and you can decide if that number works in your operation.”

Hampton says monitor prices through your local distributor and keep up on the news, in particular what crude oil prices are doing to see when there may be a pricing opportunity.

I’m Bob Hoff and that’s Washington Ag Today on the Northwest Ag Information Network.