exactly...First Fuel Banks' company strategy seems a recipe for disaster to me...but if anyone is starting a similar business plan here..I am on!
On 5/16/06, Kiran Jonnalagadda <[EMAIL PROTECTED]> wrote:
I don't get this business. Exactly how does First Fuel Banks stand to
gain if customers only withdraw fuel when regular market prices are
higher? Are they banking on fuel prices crashing?
~j
On 15-May-06, at 9:38 PM, sriram bala wrote:
> southwest airlines uses a similar model on a larger scale to buffer
> rising fuel costs.
> From Wikipedia <snip>
> One of the reasons for profitability is Southwest's reliance on
> fuel hedging. Almost since its inception, Southwest has purchased
> fuel options for years in advance to smooth out fluctuations in
> fuel costs. Southwest substantially increased its hedging in 2001
> in response to projections of increased crude oil prices. The use
> of these hedges helped Southwest maintain its profitability during
> the aftermath of the September 11, 2001 attacks and the oil shocks
> related to the Iraq War and later Hurricane Katrina. As of 2005,
> Southwest is currently paying 50% of the market price for its fuel;
> however, that number will increase as hedges from 2001 and 2002
> expire and new hedges at higher prices take effect. Southwest has
> hedges of varying percentages and prices in place through 2009.
--
Kiran Jonnalagadda
http://www.pobox.com/~jace
