Fuel Hedging No Longer Exclusive To Industry Giants
Fuel prices have been on a slight decline, but today’s average diesel prices are more than three times the average price in the 1990s. Companies of all sizes are impacted by the fluctuations, but tools, such as fuel hedging, used for minimizing the risk of price spikes that eat into profitability have been limited for companies smaller than the Fortune 500. The most well known example of fuel hedging as a financial strategy is airline industry giant Southwest Airlines which between 1999 and 2008 saved approximately $3.5 billion through fuel hedging and successfully continues the practice to this day.
Unlocking this opportunity for smaller companies to compete on a level playing field, The Gibraltar Group has partnered with Magellan Fuel Solutions, international leaders in fuel price protection, to offer its FUELFOX Protection service to companies with fleets of all sizes in the Southwest United States.
The thought of locking in a set price for a product as volatile as fuel may in itself seem risky for companies smaller than the giants of the Fortune 500, but with a downside assurance rebate in the event fuel prices drop, FUELFOX Protection guarantees companies the lowest fuel prices available. Buyers pay the same amount every week without worrying if fuel markets are going up or down.
“This is a very powerful tool for business leaders to turn variable costs into fixed costs and remove uncertainty,” said James Padilla, chairman of Magellan Fuel who is the former president and COO of Ford Motor Company. “Partnering with The Gibraltar Group has added instant access to an entire team of risk management advisors that companies can tap for access to a global wealth of experience and knowledge in financial risk management and technology implementation.”
“One of the greatest risks facing companies with trucks on the road is fluctuations in fuel costs.” said Brandt Beal, president and CEO of The Gibraltar Group. “By addressing price volatility from a risk management perspective, we help provide the right tools to fit each unique client situation to ensure fuel cost certainty, savings potential and peace of mind.” For trucking, transportation and logistics businesses, as well as the organizations they impact, The Gibraltar Group is committed to strengthening the supply chain by actively managing transportation risks.
“Pricing trends indicate that now is the best time to hedge,” said Beal. “Fuel pricing trends show that the past four years have been fairly stable, typically with shorter-term and less severe changes in pricing, however, the next hurricane season, conflict in the Middle East, or unplanned outages in U.S. refineries and pipelines can change that overnight.”
With FUELFOX Protection, companies hedge fuel pricing through the pre-purchasing of unleaded and diesel fuel online, which is stored in a cloud-based storage tank. As a result, businesses can more accurately control fuel expenses and reduce costs. Fleets can take advantage of unlimited capacity and universal access to their virtual fuel storage solution. Drivers seamlessly take delivery at the pump using their existing fleet cards. FUELFOX Protection is available in three-, six-, 12- or 18-month fixed price program terms for gasoline or diesel.
About The Gibraltar Group
With offices in Lubbock and Dallas, Texas, The Gibraltar Group is a risk management firm advising companies in the energy/oil field services, transportation and manufacturing industries on all areas of financial, strategic and operational risk. For more information, visit www.GibraltarRisk.com.