Hedging Fuel Price Risk can be Daunting
IT DOESN’T HAVE TO BE
Learn Practical, Hands-On Strategies from a Seasoned Practitioner!
Energy prices can turn on a dime; don’t let that dime ruin your margins. In today’s market environment hedging is critical.
POWERHOUSE’s Practical Fuel Hedging is uniquely situated to deliver working knowledge and tools that can be put to use immediately. Come and learn how hedging can improve your company’s profit from an instructor who is in the market every day working with companies just like yours. Come and learn how to use futures and options to protect your margins from unpredictable fuel price changes.
This course will cover:
- Identifying how price volatility can impact your business’ profits
- The vocabulary of hedging
- Differences between futures and options contracts
- Marketing opportunities rising from price volatility (offering caps, fixed, and collars to
- A thorough explanation of basis
- How to use the energy market’s seasonal patterns to your competitive advantage
- Establishing a hedging program in your company
- Which specific hedging tools and strategies will help you manage your risk
- Creating a hedging strategy to practice what you’ve learned
- You will leave with educational and reference material valued at over $200
- Class attendance includes a post-class hedging consultation with the instructor
- You will gain new business relationships and industry contacts from which you will benefit for many years.
All of this in just 2 days.
Day 1, Thursday
8:30 – 9:00 a.m. Registration/Continental Breakfast
9:00 – 9:30 a.m. Instructor Introduction/Review of Goals Meet our instructor, Elaine Levin, a veteran at creating and implementing fuel hedging programs. She’ll review what you can expect to learn over the next two days.
9:30 – 10:15 a.m. Risk Management 101: What is Your Risk? Identifying the risks and opportunities that arise from price volatility is the first step in developing a hedging program. In this session, we’ll cover:
- The importance of a hedging plan as part of your overall fuel buying program.
- What is your price risk?
- How managing price risk can present opportunities for your business.
- The risk and challenges unique to gasoline retailers or diesel fuel marketers.
- Speculating v. hedging – we’ll explain why not hedging can be speculating.
10:30 – 11:00 a.m. The Vocabulary of Risk Management Futures trading and risk management has its own vocabulary. It is important to understand the terminology unique to hedging. In this session, we’ll break down:
- Definitions of futures, forwards, options, and swaps.
- What a physical market is, and how it differs from a futures market.
- An explanation of OTC markets and counterparties.
11:00 – 11:15 a.m. Refreshment Break
11:15 – 12:15 p.m. What is a Futures Contract? Before you can begin to set up your own hedging program, you’ll need to understand futures contracts and how they work. In this session, we’ll explain:
- The NYMEX: what it is, and why it’s so important.
- Who buys, and who sells futures contracts?
- How to determine if you are a long or short hedger.
- The costs and cash flows of trading futures contracts.
- The entire process of placing a futures order from start to finish.
12:15 – 1:30 p.m. Networking Luncheon
1:30 – 1:45 p.m. Concept Quiz 1 Think you understand it all so far? Let’s make sure you do with a brief quiz.
2:00 – 2:30 p.m. Futures 102: Putting the Futures Contract to Work For You Now that you have a basic understanding of a futures contract, let’s delve a little deeper. Listen as we detail:
- What your company needs to do to get started with a hedging program.
- A step-by-step walk through of how money flows through a hedge transaction.
- Real examples of how buyers and sellers of petroleum use basic futures contracts to hedge their profit margins and grow their businesses.
2:30 – 2:45 p.m. Refreshment Break
2:45 – 4:00 p.m. The Basics of Basis Basis is the connection of the futures transaction to your local buying or selling. In this session, our veteran instructor will explain to you in clear and simple language:
- Basis and its relationship to supply and demand in your local market.
- How changing basis can impact the outcome of the hedge.
- Interpreting how your local physical fuel market relates to the NYMEX.
- How understanding historical basis trends can make you a more informed physical fuel buyer
4:00 – 4:30 p.m. Concept Quiz 2 Make sure you understand the concepts we learned today with another quiz.
4:30 – 6:30 p.m. Networking Cocktail Reception
Day 2, Friday
8:30 – 9:00 a.m. Continental Breakfast
9:00 – 10:00 a.m. Options Workshop: The World Beyond the Basic Futures Contract Hedgers also need to understand how options work – it’s the next step after basic futures contracts. Options are used to create capped price programs, as well as strategies such as “no-cost collars”. We’ll explain:
- A simple explanation of what an option is.
- Puts and calls – what they are, and how they differ.
- How to create and market a cap program.
- Average price options – how they work for the ratable fuel buyer.
10:00 – 10:30 a.m. Concept Quiz 3 Let’s make sure you understand options.
10:30 – 10:45 a.m. Refreshment Break
10:45 – 11:45 a.m. Managing Profit Margins at the Pump Through Futures Spreads Gasoline retailers can find their margins caught between a rock and a hard place. Refiners raise prices but consumers resist, squeezing the retailer’s margin. This session really digs into that problem and suggests some solutions:
- How retailers have successfully protected profits from the squeeze of higher rack prices.
- How to maintain volume despite rising prices.
- When retail profit margins are most at risk.
- How the refining cycle impacts your business and your profits.
BONUS: Spread trading – why professional traders watch the relationship between futures months, and why you should too.
11:45 – 12:15 p.m. Working Luncheon
12:15 – 1:30 p.m. The Basics of Fundamental and Technical Analysis in Today’s Market No one hedges in a vacuum. Understanding the basics of supply and demand is important, but not the only thing. In this session, Elaine will explain:
- Fundamental analysis – what’s happening in today’s oil markets, including both short term and long term assessments?
- EIA data – what to watch each week.
- The connection between financial markets and oil markets, and how that affects you.
- Behavioral finance and technical analysis– why you need to watch the direction of the herd.
1:30 – 2:30 p.m. Group Case Study: Creating a Successful Hedging Strategy We’ve covered the basics, and now it’s time to put what you have learned into practice. Our instructor will present a scenario to the class that outlines a fuel business and the market conditions under which it is trying to manage risk. We’ll break the class into groups, and discuss:
- What price risk does this business face?
- What risk management strategies would you use, and why?
- Finally, our instructor will analyze all the decisions and rationales the groups make. What worked, what didn’t, and why.
2:30 p.m. Final Q & A/Conference Adjourns
Elaine Levin, President of Powerhouse is your instructor. She is a dynamic and well-respected energy broker and hedge advisor. You’ll get hands-on risk management training from someone who lives and breathes this market day in and day out. Elaine has successfully managed the books of some of the industry’s largest fuel buyers. Benefit from her impressive career helping companies control costs by hearing her plain language explanation of exactly how to take advantage of today’s risk management tools.
1310 Wisconsin Ave NW
Washington, DC 20007
Reservations: (202) 333-8900
Ronald Reagan National Airport (DCA)
Dulles International Airport (IAD)
Discounted Room rate: $279 (Register Today — a limited number of rooms are available at this rate; and this rate is only available until April. 19, 2022). When calling, you must let the hotel know you are with the Powerhouse Practical Fuel Hedging Group room block.
If you are unable to attend, you are welcome to send a substitute. Otherwise, you can cancel in writing by April 25, 2022 to get a partial refund by emailing email@example.com. After that time, there is a no refund at cancellation. Registrants who do not cancel or do not attend are liable for the full fee.
Who Should Attend
- Petroleum marketers
- C-store owners
- Fuel wholesalers
- Hypermarket retailers
- Procurement/purchasing specialists
- Bulk fuel end users
- Risk management professionals
- Truckstop marketers/operators
- Fleet managers
- Gas & diesel retailers
- Service station dealers
- Terminal owners/operators
- Fuel distributors
Elaine Levin, President of Powerhouse is your instructor. She is a dynamic and well-respected energy broker and hedge advisor. You’ll get hands-on risk management training from someone who lives and breathes this market day in and day out. Elaine has successfully managed the books of some of the industry’s largest buyers and sellers of fuel. Benefit from her impressive career helping companies control costs by hearing her plain language explanation of exactly how to take advantage of today’s risk management tools.