For all modes of transport, gasoline and petroleum distillates are a major cost component. Nonetheless, it is still difficult to manage fuel price risk with illiquid basis points, multiple grade and quality differentials, and hedge accounting standards poorly suited to fueling and logistics. Many companies also find themselves asking how they can integrate a biofuels strategy without negatively affecting current hedging and logistics strategies.
Our professionals have long-standing experience in fuels risk management, with a special focus on portfolio-based approaches and linking logistic strategy to hedging choices. We have also been at the forefront of the biofuels market development, helping producers, blenders, and end-users manage their price risks in developing markets. Some of our experience includes:
- Developing mixed-fuel and multi-location hedge strategies
- Integrating purchasing, hedging, and logistics to balance fuel risks with opportunities
- Implementing risk models which capture price, volume, and fuel-switching risks
- Linking biofuels initiatives to commercial strategy and hedge strategy
- Counterparty risk measurement and diversification
- Derivative accounting, effectiveness testing, and performance modeling