Re: slightly off topic the price of diesel

Posted by David-III on March 27, 2005 at 08:37:52 from (207.69.139.133):

In Reply to: slightly off topic the price of diesel posted by Jim K on March 27, 2005 at 07:40:13:

Fuel is a commodity.

A large capacity fuel tank, say 5000 gals allows the farmer/contractor to speculate in fuel. If as they say the stuff will get to $3.00 by this summer, if you fill the thing up you will make $5000 if the fuel increases from $2.00 a gallon to $3.00/gal.

On the other hand if it goes down to 1.00 a gallon(unlikely), you will loose $5000 but your fule costs would be $5000, or $10,000 in any event. So it is a classic bet on the future with no risk over current prices.

The smart money in my opinion would immediately go out and buy now the amount of fuel you expect to use for the rest of the year.

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