Hedging Strategies & Risk Management for Heating Oil Dealers

Whether you buy forward wet barrel contracts from a supplier and/or hedge with paper contracts we can improve upon these strategies and always find ways to cut hedging costs. Additionally, if you are hedging fixed or capped price programs we can advise you on improvements to hedging and managing the processes in order to avoid margin erosion and exposure to volatile price swings.

A consulting relationship with Hedge Solutions targets four key areas to insure a successful energy risk management strategy:

Information

We are your eyes and ears in the marketplace. Our daily newsletters, Pipeline and Evening Energy Reports, keeps our clients up to date on the latest energy prices and news from the global marketplace. We track fundamental information on a weekly basis, analyzing changes to supply and demand that could impact your prices down the road. We also track technical data that might impact prices short term. Most importantly we condense an enormous amount of “noise” and voluminous inflow of information down to a quick read on the most prominent bullet points impacting prices that day.

Planning

Deciding on a fuel hedging strategy may be the most important decision you make for your business. We’ve developed powerful tools that will identify the risks to your P&L, and project the impact of market fluctuations. Next, we can apply a variety of fuel hedging strategies, running “what-if” analysis to determine which plan will best mitigate the risks you face. “How much premium should I spend? Am I going to hit my target margin?” We can take the mystery out of those questions. Once we’ve implemented the strategy, we will continuously monitor margin performance throughout the delivery period.

Our Lodestar system provides a blue print with a detailed schedule on exact quantities to buy and what strategy to use. It is a virtual road map to keep you on point with your program offerings.

Execution

This is an area where the best intentions can go astray. Properly executing an energy risk management strategy can make all the difference in a successful hedge program and impact gross profits. Again, the Lodestar system helps guide you through the execution protocols and ensures a disciplined adherence to your game plan.

Accounting

As you move through the year, we track exactly how your margins are performing relative to expectations using our proprietary management software, Hedge Insite. Have consumption rates changed? Is basis behaving? We can evaluate where you stand in “real time,” providing opportunity to make changes as needed so you meet or exceed your target profits.

Our energy procurement consulting services don’t stop there. We view the relationship with our clients as a true partnership, providing advice on a variety of other areas, such as contract negotiations and business expansion. We’ll review your procurement practices and make recommendations on how to manage your product acquisition. Should you be looking at Platts or Argus indexes? How are is your rack pricing compared to the marketplace? Are you utilizing the supplier portals to your advantage? MarginTrak, our proprietary software that tracks margins, basis, and short-term hedging, is enormously popular with our clients and a proven system for improving retail margins. All of this is included in your monthly consulting fee.