Blog > December 2019 > Practical Reasons to Consider Contracting Fuel 

Practical Reasons to Consider Contracting Fuel 

December 4, 2019
One of the biggest concerns for any business is the constantly changing fuel costs, and the agriculture industry is no exception. Because the energy markets change constantly, being able to make an informed decision about the fuel purchases for your operation is a must for today’s producer. Unfortunately, many producers miss out on this great opportunity to insulate themselves from the volatility that the energy market is known for.

The way to protect your operation is by contracting your fuel ahead of time as the market allows you to do so. I would like to suggest to you three reasons why you should consider contracting fuel ahead of time for next year.
Purchasing fuel early allows your operation to be profitable…
Many times, if you have purchased fuel during the peak seasons for fuel usage (e.g.: spring/fall planting, harvest and increased travel periods) you probably have paid more per gallon than you would have otherwise if you had filled up prior to those high demand seasons. When contracting fuel, timing is key. More times than not we will see lower fuel prices during the low usage seasons. As you know, there are exceptions to this rule but being able to set a price that works for your operation is key to becoming a more profitable operation this year. Why would you want to pay more for your fuel if you knew that you could save money by contracting your fuel in the low demand seasons. In 2019 the difference between the high and low fuel price was around 50 cents per gallon. If you used approximately 6000 gallons of fuel last year you could have potentially saved between 1000-2000 dollars compared to buying it during the highest price of the season. This is real money back in your pocket that you could spend elsewhere on your operation. Purchasing your fuel early when the market allows for favorable pricing can help your operation to become more profitable this next year.  

Purchasing fuel early allows your operation to be prepared for the worst…
If you have been involved in agriculture for any length of time, you know what its like when disaster strikes. Unfortunately, its not a question of “if” something will occur, but rather it is a question of “when” something will occur. Untimely breakdowns, droughts, or even cattle that have even escaped from the pasture are a few examples of this reality. Don’t let your fuel purchases be one of them. Planning and contracting fuel ahead of time does two things for you. First, it gives you the piece of mind knowing that you will lock in a price that you believe will allow you to become a more profitable operation this year. Second, it allows CVA to continue to provide you with the best customer service that you have come to expect and provide you regularly scheduled deliveries, so you don’t run out of fuel when you need it most. Preparing for the worst helps you when problems do arise giving you control over the situation, regardless if it is financial or operational.

Purchasing fuel early allows your operation to plan for timely deliveries…
While you still have the option of calling in when you need a delivery, one of the best reasons to contract fuel for the next growing season is that it allows you the option to take advantage of our Automated Fuel Delivery (AFD) monitoring system. It is true that you can take advantage of AFD year-round, but did you know that by coupling your fuel contract with our AFD monitoring system you can have the piece of mind knowing that your Cenex® Premium Diesel fuel will be there when you need it most.
As you can see, by contracting fuel when the market allows you can become more profitable, be prepared for the worst, and allow us to be even more prompt when delivering our Cenex® Premium Diesel fuel products. If you would like to learn more about contracting fuel, daily contract pricing, Automated Fuel Delivery, or our Cenex® Premium Diesel products you can call your local CVA energy office or reach out to the Certified Energy Specialist in your area. We look forward to helping you with your energy needs this next year.
by Justin Fleming, Energy Specialist 
Posted: 12/4/2019 8:44:51 PM by Mallory Shoemaker | with 0 comments
Filed under: contracts, energy, fuel

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