The fuel industry can be complex, especially if you are just getting started buying bulk. While you cannot learn everything about the industry in one sitting, you can educate yourself on the basics. Here is a quick guide to buying bulk fuel and ways to get the most from your purchase each time.
1. Find a Dependable Supplier
In an intricate fuel industry, the importance of building a solid relationship with a reputable supplier cannot be overemphasized.
When looking for a fuel supplier, find out about their availability, how easy it is to reach them, and their responsiveness. An unreliable supplier who is unable to deliver fuel as scheduled can easily put a dent in your bottom line.
Additionally, ask about the supplier's source of fuel. Ideally, a supplier should have more than one sources of fuel in case of possibilities like shortages and unexpected price hikes.
When you work with a supplier with multiple sources of fuel, you stand a better chance of consistent supply even when there are supply and price fluctuations in the market.
2. Opt for a Fixed Contract
When buying bulk fuel, you have the option of buying on the spot or buying through a contract. Spot buying means purchasing fuel from a supplier on a per-needs basis without any scheduled purchase and delivery parameters.
Spot buying exposes you to the whims of a constantly fluctuating market. If you wait until your tank is empty to buy fuel, you will likely make a panicked purchase decision, which could end up costing you more.
To avoid this, consider entering into a contract with your supplier for scheduled delivery of fuel over a period of time.
Contract buying confers several benefits to the buyer. First, with a contract, you can lock in the price of fuel and guard against huge price fluctuations that can easily disrupt your operating expenses and expected profits.
Second, a contract lets you forecast your budget by converting what is otherwise a capricious expense into a predictable and fixed cost. This will, in turn, allow you to streamline your cash flow.
Lastly, a bulk fuel contract removes the unease caused by the vagaries of the fuel market. With a contract, you are sure to have fuel supplied to you anytime you need it.
3. Ask About Oil Price Benchmarks
Find out about the benchmark your supplier uses to price fuel. Ideally, you should base your contract on one of the industry benchmarks such as the Oil Price Information Service (OPIS).
Basing a contract on an industry benchmark ensures price transparency and responsiveness to market trends. You can tell whether you are paying fair market prices for your fuel.
In addition to OPIS, other industry benchmarks include EPEX SPOT, PLATT, and NYMEX. These are just general industry standards and should not disqualify a supplier. The important thing is to work with a supplier who is transparent with you about prices and can clearly explain any spikes.
To get the most bang for your buck, stay up to date with trends in the global and domestic fuel market. Stay ahead of the curve to help you negotiate your contracts better, plan your fuel usage, anticipate shortages and price fluctuations, and prepare your business for any eventualities in the fuel market.
For over 20 years, Biltmore Oil has been a leading wholesale supplier of gasoline and fuel products. We have established a reputation for quality and transparency to ensure that you get value for your money with each transaction. Get in touch with us today to discuss your needs. We will be happy to tailor a personal plan for you.