Enterprise Fleet recap: Dealing with volatile fuel prices

BIO: Levin has more than 30 years of experience working with energy producers, refiners, marketers and consumers executing hedging strategies. Powerhouse designs and implements hedging strategies focused on price risk management using energy futures and related financial instruments. Levin is the instructor of Powerhouse’s Practical Hedging Course.

Prior to Powerhouse, Levin was the VP of futures specialist at Morgan Stanley. She has taught the principles of price risk management to hundreds of senior energy industry executives. 

KEY QUOTES FROM LEVIN:

“You’re still going to buy your diesel from whoever you buy your diesel from. But what changes is how you finance it because you could have proceeds from the hedge that go to offset the higher price that you’re paying at the pump.”

“You can’t let perfect be the enemy of the good. We’ve seen fleets that looked at when the pandemic brought prices lower, they said, ‘This is a great opportunity to ensure that we keep that low price in our budget.’ So they bought a hedge using options out several years, and right now, their diesel in some months is the equivalent of $1.60 a gallon.”

“For this to work, you can’t be reactive. You want to be proactive, so you need to commit to doing this regularly.”

“A lot of people who are watching this may say, ‘Well, I’ve got a fuel surcharge.’ But what we’re finding is those fuel surcharges are not keeping pace with what’s happening in the market.”

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