The NYMEX propane contracts are an unreliable vehicle for propane risk management because of the lack of liquidity coupled with extreme swings in the differential between the NYMEX and the Conway propane market. However, there are other ways to address the risk management issue:
- Purchasing fixed-forward contracts for propane is very flexible. The quantity contracted can vary from a single load to virtually any number of gallons. The delivery window is also very flexible and not restricted to monthly increments as is common with gasoline and diesel fuel.
- Over-the-counter swaps and options are available as vehicles for hedging sales and/or inventory against price increases or declines.
The aforementioned risk management tools can be used independently or in combination to fit the customer’s needs. Consultation with a Fauser Energy Resources Representative will identify individual strategies and create a well-designed value management program that will stabilize volatile propane markets. A solid, conservative approach to controlling forward values will enhance long-term profitability.
To further explore propane risk management opportunities, contact us at firstname.lastname@example.org.
HOME AND FARM/LOCAL DELIVERY
Fauser Energy Resources delivers a complete line of quality propane and petroleum products in northeast Iowa.
Products and services are delivered locally to residential, farm, construction, commercial, aviation, and industrial customers.
Fauser Energy Resources is uniquely positioned to provide value to our clients. Leveraging a multi-faceted business over several Midwestern states has made us a large, aggressive, independent energy marketing firm delivering petroleum products across many different pipelines. Our many relationships with refiners and suppliers, as well as our active participation in a broad spectrum of trading, produces reliable, competitively-valued products.
We are a Midwest leader in creative price methodologies, constantly researching and applying innovative techniques for producing value.
Fauser Energy Resources’ experienced marketing representatives will assist each client in attaining the best value available in petroleum procurement.
Through our ownership of Dawson Oil, Fauser not only offers a reliable source of propane supply, but also offers the tools to assist in managing the risk associated with inventory ownership and supplying future requirements.