How to hedge/secure Gazoline (prices) ? - Ferrari Life
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post #1 of 26 Old 10-24-2011, 07:52 AM Thread Starter
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How to hedge/secure Gazoline (prices) ?

Being very critical (and sometimes more concerned than I probably should) I wonder how I/we could secure some loads of gazoline for ourself's in case of imminent supply shortages at local gaz stations. Whatever the cause for such shortages may be (I do not want to get too political here) I do understand how to buy gazoline futures on the mercantile exchange and therefore partially hedge possible price fluctuations regarding my future gaz consumption (well the applied to be varied tax rate in case of turmoil may not be included in the hedge). Disregarding physical US delivery of gazoline on a US port, I generally wonder just out of curiousness how gazoline can be stored secure and without evaporation ? Lets say 200 - 500 gallons. Any ideas, thoughts ?

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post #2 of 26 Old 10-24-2011, 08:38 AM
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212- Farmers here keep large tanks of tax exempt gasoline (with a dye) to operate farm machinery. Some are in-ground, but most are above ground. It should be no problem for any car owner to buy and install such a tank if you have enough real estate. In ground would be invisible, but require a bigger pump and be more difficult to maintain. Above ground would be the simplest, but the most unsightly unless camouflaged. For safety reasons, you probably would not want it in an enclosed space, unless purposely built and well ventilated. Then it would just be a matter of contracting with your local distributor to fill the tank on a regular basis. Evaporation is not much of a problem in a sealed system with some kind of non-emitting breather system to keep pressure constant.

You probably would save money on the gasoline from a distributor, but it would take a while to pay off the initial investment. There are probably local zoning restrictions on having such a bomb in residential locations, so you would need to check on those.

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post #3 of 26 Old 10-24-2011, 10:13 AM
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Fuel (gasoline, diesel, etc ) goes bad with time (few months ). Fuel with alcohol blend goes away even faster. 200 - 500 gallons is not a lot of fuel to a distributor. Depending on the number of vehicles one is operating it may not be enough fuel to be dealing with even as a user. Convenience for off road vehicles that can't otherwise be fueled would be about the only reason to have fuel on one's premises. I would prefer to be on the correct side of a future's contract and use the profits to pay market price
at my favorite gasoline supplier.
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post #4 of 26 Old 10-24-2011, 11:38 AM
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212, i wonder why you are worried about a gas shortage? we have only ever had one here and that was do to a trade war, not supply. it was also not very long lived. now that there are proven reserves going out at least 100 years, what makes you worry now?



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post #5 of 26 Old 10-24-2011, 07:08 PM
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My Dad felt the need - placed a 500 gallon tank high in the garage. Keep in mind he was always worried about shortages and when they stopped making dual tanks on the International he switched to GMC's. I think each tank held 20 plus gallons.

After he passed we were finding hidden treasures for years - always wonder about the gelt that we didn't find
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post #6 of 26 Old 10-24-2011, 08:19 PM Thread Starter
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Many thanks to all of you regarding your thoughts !

@wetpet: There is no doubt about big oil reserves in the ground. To me thats not the problem. A problem (in my fantasy) could occur in case of economical crisis times and/or mob turmoil or a break of structural delivery systems for 1-4 weeks after any turmoil or disruption would occur. Hence my 200-500 gallon calculation. However I really never knew how it could be properly stored or what infrastructural effort it would take to savely store it. Gazoline could also be used as some efficient replacement for some short time to go around any electrical breakdown on house heating systems and other inhouse infrastructure in case of electricity fallouts. Just thoughts.

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post #7 of 26 Old 10-25-2011, 07:17 AM
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pretty easy to store in those quantities. legally storing it could be a problem. lots of regs involved. simply purchasing a storage container and filling it up should be pretty straight forward. 4 55 gallon drums in the garage with a tap would be an inexpensive, easy way to get started. here in the us i think you can just have it delivered.



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post #8 of 26 Old 10-25-2011, 07:26 AM Thread Starter
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pretty easy to store in those quantities. legally storing it could be a problem. lots of regs involved. simply purchasing a storage container and filling it up should be pretty straight forward. 4 55 gallon drums in the garage with a tap would be an inexpensive, easy way to get started. here in the us i think you can just have it delivered.
Interesting, thanks a lot for the information. I'm sure, the security fascinated swiss (local fireguard) will never allow that to be stored in a Garage or vice versa the house insurance company then will not pay the bill in case of a fire as "unnaturally lots of gallons of dangerous and flamable fluids" have been stored !?

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post #9 of 26 Old 10-25-2011, 07:34 AM
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post #10 of 26 Old 10-25-2011, 08:43 AM
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It would work better with diesel that takes longer to break down than gas. After a while that 500 unused gallons turns to varnish and isn't worth putting in your lawn mower.

Last edited by JayG; 10-25-2011 at 08:53 AM.
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post #11 of 26 Old 10-25-2011, 11:20 AM
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Unfortunately, stored gasoline degrades quite quickly, so storing it is not an option.

The most direct hedge, as has been mentioned, is a position in futures, however you have to deal with the roll of the contracts. A way to avoid it is buying an ETF (I am sure there is something available).

In my case, I have owned some oil stocks for over 20 years, as a hedge to increasing oil prices. It is qute an imperfect hedge, but it provides some moral justification to continue driving 'inefficent' cars.

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post #12 of 26 Old 10-25-2011, 01:22 PM
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Quote:
Originally Posted by JayG View Post
It would work better with diesel that takes longer to break down than gas. After a while that 500 unused gallons turns to varnish and isn't worth putting in your lawn mower.
Diesel breaks down easily as well... faster if in the fuel tank of a vehicle... all fuels grow crud, fuel has absorbed water in it ( in addition to any "free water" that may find it's way into a tank, water feeds the "garden" ... injection systems subject fuel to high pressure and heat before the unused fuel is returned to the tank, the high pressure and heat breaks down the fuel each time it passes through the injection block

Better not to store fuel of any kind,
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post #13 of 26 Old 10-25-2011, 03:35 PM
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Diesel breaks down easily as well... faster if in the fuel tank of a vehicle... all fuels grow crud, fuel has absorbed water in it ( in addition to any "free water" that may find it's way into a tank, water feeds the "garden" ... injection systems subject fuel to high pressure and heat before the unused fuel is returned to the tank, the high pressure and heat breaks down the fuel each time it passes through the injection block

Better not to store fuel of any kind,
True - the best solution may be to install a propane conversion kit.
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post #14 of 26 Old 10-25-2011, 09:45 PM Thread Starter
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Originally Posted by Rallyman View Post
Unfortunately, stored gasoline degrades quite quickly, so storing it is not an option.

The most direct hedge, as has been mentioned, is a position in futures, however you have to deal with the roll of the contracts. A way to avoid it is buying an ETF (I am sure there is something available).

In my case, I have owned some oil stocks for over 20 years, as a hedge to increasing oil prices. It is qute an imperfect hedge, but it provides some moral justification to continue driving 'inefficent' cars.
It's exactly what I didn't knew..that unleaded gas is less storable than i.e. diesel. Futures rolling over is one argument against, also that futures unleaded prices are based on U.S. delivery. I'm much less sceptical for the U.S. ability to serve their people with gas and they will. Here in Europe if fuel shortage could occur they would limit it to each one per day AND put additional taxes on it to show "their people" how wrong it is to use high consumption vehicles. A "unhedgeable disparity I guess" ?

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post #15 of 26 Old 10-26-2011, 04:45 AM
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post #16 of 26 Old 10-26-2011, 06:06 AM Thread Starter
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partnership in a gas station??
Now that is something...!!

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post #17 of 26 Old 11-01-2011, 09:12 PM
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Funniest thread I have ever read.
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post #18 of 26 Old 11-02-2011, 07:26 AM
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I don't see fuel supply shortages. There's tons of oil;it's just a matter of oil company releases to maintain high prices.

When oil was discovered in Alaska in 60's the geologists said there was enough there to supply the whole world's needs at the then consumption rates for 64 years!

That oil is used little in US due to high sulphur content. It gets exported to Japan mostly. The Japanese have built scrubbers to clean the exhaust fumes from commercial use.

I believe there are tons of oil but will be let out slowly. No need to stockpile.

In US there are taxes that have to be paid. So buying wholesale requires permits, etc. No value for individuals

Just keep going to local stations. They will be there a long time.
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post #19 of 26 Old 11-02-2011, 02:26 PM
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I don't see fuel supply shortages. There's tons of oil;it's just a matter of oil company releases to maintain high prices.

When oil was discovered in Alaska in 60's the geologists said there was enough there to supply the whole world's needs at the then consumption rates for 64 years!

That oil is used little in US due to high sulphur content. It gets exported to Japan mostly. The Japanese have built scrubbers to clean the exhaust fumes from commercial use.

I believe there are tons of oil but will be let out slowly. No need to stockpile.

In US there are taxes that have to be paid. So buying wholesale requires permits, etc. No value for individuals

Just keep going to local stations. They will be there a long time.
You obviously know some things, but are misinformed on others. There are no permits required for gasoline. Unless you are a state or federal organization you cannot get any exemptions on gasoline, only Ultra Low Sulfer DF, but you still have to pay all the taxes first, then can apply back for credit for part of the taxes. Most farmers / contractors buy Ultra Low Sulfur Dyed DF for their off road equipment so they don't have to deal with the tax credit issue.

We get calls often about buying a 500 gallon tank to save money. First you have to buy the tank, about 600-800 wholesale. Then you have to buy a pump, want electric, or hand pump, with meter or without. Then take that total cost and factor that into how many gallons you will use annually then you have to add that / per gallon price to your delivered price. For someone to drive a truck out to deliver 500 gallons, they probably need a minimum of 20 cents gross, depending how far away you are. There are many times throughout the year that rack to retail margins are way less than 20cpg.

That's why I find the original question hilarious.
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post #20 of 26 Old 11-02-2011, 02:28 PM
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Quote:
Originally Posted by tazandjan View Post
212- Farmers here keep large tanks of tax exempt gasoline (with a dye) to operate farm machinery. Some are in-ground, but most are above ground. It should be no problem for any car owner to buy and install such a tank if you have enough real estate. In ground would be invisible, but require a bigger pump and be more difficult to maintain. Above ground would be the simplest, but the most unsightly unless camouflaged. For safety reasons, you probably would not want it in an enclosed space, unless purposely built and well ventilated. Then it would just be a matter of contracting with your local distributor to fill the tank on a regular basis. Evaporation is not much of a problem in a sealed system with some kind of non-emitting breather system to keep pressure constant.

You probably would save money on the gasoline from a distributor, but it would take a while to pay off the initial investment. There are probably local zoning restrictions on having such a bomb in residential locations, so you would need to check on those.
Taz is closer, however there is no "dye" in gasoline, it's in DF. Farmers do not get any tax credits state or federal for gasoline, only DF used in off road application only.
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