JUNE 2018 • FOGHORN 17 FOGHORNFOCUS: OPERATIONS © 2017 Caterpillar. All Rights Reserved. CAT, CATERPILLAR, BUILT FOR IT, their respective logos, ”Caterpillar Yellow,” the ”Power Edge” trade dress as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission. See our complete offer for ferries and cruise ships at marine.cat.com See the video at storiesfromsea.com PLEASE DO NOT REMAIN SEATED Do not switch of all electronics. Please move around freely. And above all, do not miss the spectacular beauty off the sea. With Cat® high performance engines, the total time of your journey could be the same as flying. Only with better views. And without the leg cramps. cat_ad_ferries.indd 1 08/01/18 22:30 in petroleum prices, there are many other factors that come into play such as weather, oil speculators, civil unrest, and global geopolitical issues. And even with this additional knowledge, decision makers who are trying to satisfy petroleum budgets are no different than professional traders who are right most of the time. In June 2014 Crude Oil prices were over $110 barrel. No one saw the crater coming and less than 18 months later Crude was below $30 barrel. Obviously the price of crude oil generally determines the price of a gallon of diesel fuel, gasoline, heat oil, jet fuel etc. The volatility that started in 2014 was as a result of OPEC members over producing to drive US shale oil out of business. They almost succeeded but American ingenuity allowed US in- dependent oil producers to weather the storm and today the US is the third largest producer of crude in the world. But, as you know, prices have jumped considerably in the last year. OPEC, joined by Russia and other non OPEC countries reduced output by 1.8 m barrels a day and the worldwide surplus is shrinking quickly. Of course OPEC has had help with member country Venezuela in an economic tailspin and losses in volume from Libya and Nigerian from civil strife in those countries. Santa Buckley provides this type of information on a regular basis to petroleum purchasing decision makers so they can make more informed decisions. Few if any are fortunate enough to execute fuel contracts when oil markets are at the lowest but armed with good information these decision makers are able to satisfy budget pa- rameters. We also stress to customers that fuel contract purchasing is a bit like an insurance policy. For example, if a customer consumes 250,000 gallons of diesel fuel a year we typically recommend that they purchase at least half of the product through fixed price contracts. If rack prices spike they are not subject to the enormity of the increase.And if prices slide the average price of product will be lower. In certain instances such as we experienced in 2014 we encouraged customers to purchase a large portion of their petroleum requirements because of the historic lows in real dollars. This process is not complicated but the key to its success is a well- informed consumer. It would appear prices will continue to rise and fall based on the problems in the Middle East and supply demands from OPEC and company. However, we will see pullbacks and when that happens we can guide purchasing decisions. n About the Author Edward Santa is Vice President of Petroleum Products at PVA Associate member Santa Buckley Energy, Inc., which is based in Bridgeport, CT. He has been in the energy industry since 1994.