Before beginning our intensive work during these two days, we’ll outline our key objectives and what we will learn, plus give a summary of what is happening in the oil markets and how it affects your business.
The refining process is very complex and sophisticated – we’ll give you an easy-to-understand tutorial on how gasoline and diesel fuel are produced and how they get from the refinery to the rack and ultimately to the station or end-user tank.
Before you can learn to buy fuel smarter you must understand two key components of how racks are priced: the New York Mercantile Exchange (NYMEX) and U.S. spot markets. In this session, we’ll zero in on everything you need to know about the NYMEX.
Once you understand the NYMEX, we’ll explain how spot markets work and why they are so important to a fuel buyer. We’ll detail the intricacies of the seven U.S. spot markets and who the big players are in each of those markets.
Rack price discovery began back in 1980, and although it has changed much in the intervening years, the bottom line is that nearly all wholesale gasoline and diesel fuel transactions are based on rack prices. We’ll define what rack means, who posts prices, branded vs. unbranded, spot replacement costs, how taxes work, and the impact of the changing fuel slate.
Retail is perhaps the most complex link in the fuel chain. We’ll explain the five major classes of retail trade, how retail prices are determined and the huge challenge retailers face from hypermarketers.
For the next four sessions, we will conduct two case studies that focus intensely on creating a fuel buying plan for two very different fuel buyers – an end-user that buys about 20 million gallons annually, and a super jobber that purchases more than 300 million gallons per year.
Both companies face a multitude of challenges. For the end-user, the biggest challenge is to create a basic buying program that will keep trucks moving and not bust its fuel budget in this era of extreme volatility. For the jobber, the challenge is to leverage the large amounts of fuel that it purchases through various buying methods – branded, unbranded, spot, and some basic fuel hedging – in order to control its huge fuel costs.
Here we take step one – choosing a supplier. You’ll learn:
A rack benchmark is a cost basis that every fuel buyer needs to have and understand. The choices of which benchmark to use are numerous, and a bad decision can have very serious ramifications for the company’s fuel budget. Here you’ll learn:
More and more rack transactions are being done off a spot pipeline price. Understanding spot pricing is complicated, and we’ll break it all down for you. In this session you’ll learn:
We’ll take an in-depth look at how super jobbers buy fuel, and the unique challenges and risks that affect the way they do business and how they price fuel to resellers. Plus, we’ll discuss what many in the market are curious about – how do I become a jobber?
One of the most critical parts of any fuel buying plan is having a contract that works for you and your supplier. There are many key things that you need to be aware of in negotiating a supply contract. You’ll learn the key do’s and don’ts involved in creating and executing supply contracts and what you need to know both as a buyer AND a seller/reseller.