Fuel prices around the world.

[MoKelly]

Exxon Mobil share price has almost doubled since November.
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An aunt left me some shares a few decades ago. I’ve never touched them. Value of them has increased $35,000 since November. Over that time period I’ve probably had to spend an extra $45 at the pump. Dang gas prices!
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Yes - buying oil stocks is a pretty good hedge against higher fuel costs if that is a significant cost of doing business.

MoKelly

 

[CobyRupert]

Delete...

 

[HawkinsHollow]

then I guess radical price increases is cool with you and not me.

You are going to have to lodge that complaint with OPEC, the Russians, Coronavirus and Mother Nature. And I guess with the major oil producers from the look at that stock price graph. I don't think you are going to get very far though.

 

[Hay Dude]

I have some big grain farmers around me and what really hurt them was the commodity grain prices TANKING. Sales to other countries was disrupted so the markets sucked.

Gasoline Prices Adjusted for Inflation | US Inflation Calculator

Again, why should anyone feel better that rising fuel costs aren’t perfectly in line with average inflation? It might work for an occasional small or hobby equipment user, but not for heavy fuel users like farmers or truckers.
Sudden fuel spikes CANNOT be easily compensated for by business owners. Steady increases can, but not a 35% jump in 2-3 months. None of us can pass all of those sudden increases in expenses on to customers.

 

[ruffdog]

Hay Dude...many prices fluctuate depending on supply and demand. Like my post comparing grain prices suggested, if there is a change (like fewer drivers driving during a pandemic), fuel prices will change. You complain of a 35% change in fuel prices but where have you been the past year with steel and lumber prices going up 100%+? Yes, inflation or price swings regardless what products it affects, is shocking to people if they choose to be. Also, take the time to read and understand the site I linked to as it shows how steady fuel prices are (downward) when inflation is figured in. Here is a good article for you to read.

What Is the Relationship Between Oil Prices and Inflation?

 

[MossRoad]

Diesel fuel prices are now returning to the same price they were pre-pandemic. Looking at diesel prices over the past 10 years, it peaked in 2008 at over $4.50 a gallon, by 2009 had dropped to just over $2.00 a gallon, slowly rose through 2011 to around $3.80 a gallon, started dropping in 2014 through 2016 down to just over $2.00 a gallon again. In 2016 it started rising again trough 2019 to about $3.25 a gallon where it hovered all of 2019 at right around $3.00. 2020 it dropped to around $2.50, where it remained most of the year, and is now heading back up, not quite reaching pre-pandemic levels yet. Futures are predicting it to stay around $2.70 for the next year or two. The pre-pandemic level was right around $3.00. (source was Department Of Energy).

Hopefully that stability in prices will happen as they are predicting.

 

[MoKelly]

Futures are predicting it to stay around $2.70 for the next year or two. The pre-pandemic level was right around $3.00. (source was Department Of Energy).

Hopefully that stability in prices will happen as they are predicting.

You can use futures to lock in the price (if the futures price is acceptable or if volatility is unwanted) for as far out as futures trade.

MoKelly

 

[Hay Dude]

Hay Dude...many prices fluctuate depending on supply and demand. Like my post comparing grain prices suggested, if there is a change (like fewer drivers driving during a pandemic), fuel prices will change. You complain of a 35% change in fuel prices but where have you been the past year with steel and lumber prices going up 100%+? Yes, inflation or price swings regardless what products it affects, is shocking to people if they choose to be. Also, take the time to read and understand the site I linked to as it shows how steady fuel prices are (downward) when inflation is figured in. Here is a good article for you to read.

What Is the Relationship Between Oil Prices and Inflation?

Affected by steel and lumber price spikes, too? Affected? Dang near buried me. I have 2 construction projects that have been ground to a halt because of lumber prices! Its not just fuel for farming that I have to deal with.

 

[Hay Dude]

Diesel fuel prices are now returning to the same price they were pre-pandemic. Looking at diesel prices over the past 10 years, it peaked in 2008 at over $4.50 a gallon, by 2009 had dropped to just over $2.00 a gallon, slowly rose through 2011 to around $3.80 a gallon, started dropping in 2014 through 2016 down to just over $2.00 a gallon again. In 2016 it started rising again trough 2019 to about $3.25 a gallon where it hovered all of 2019 at right around $3.00. 2020 it dropped to around $2.50, where it remained most of the year, and is now heading back up, not quite reaching pre-pandemic levels yet. Futures are predicting it to stay around $2.70 for the next year or two. The pre-pandemic level was right around $3.00. (source was Department Of Energy).

Hopefully that stability in prices will happen as they are predicting.

I can see all that on charts & graphs. Its the sudden spikes that kill ya.

Take for example hay sales. We negotiate a selling price to a buyer for lets say 300 tons of hay in July for the following year. So once that price is locked, that’s IT. If fuel prices go up 35% on that 300 tons to be produced after the price is negotiated, I get stuck with all the extra fuel prices. This is like a bid for a contract on construction. Every spike in lumber, concrete, steel, dry wall gets absorbed by GC. You can try to negotiate escalation or sur charges in contracts, but you have to remember, there’s always a guy who won’t ask for them. He may get the bid instead of you.
So bottom line is, I cant do bids on work and build in 30% more cost on fuel, lumber, steel, etc or I would never get a contract.
My input costs would be too high.

Slow price increases are not nearly as bad.

 

[mred2]

Dude, I understand your issue. Not sure that I have any advise to help. A good friend in Arkansas quit farming 2 or 3 years ago due to just not make any money for his work. Now has land not being farmed at all. Got tired of working for break even. Still has some cows and hay fields. But no money in cows and hay is only for his use.
There are people down here in Alabama selling grass for $20 a roll, weeds, no fertilizer. I would not use it for mulch in a ditch. But they try to sell it. I have been lucky in having my hay guy only a few miles away. With really good horse hay and sells to me at good price. Cash only. He only does it because he has chicken houses and free fertilizer. Break downs and fuel is his biggest problems. If he didn't have his son to help on the hay, I am not sure how long he would stay in it. My age and ready to slow down.
Most people in this part of the country don't realize what good hay costs in other parts of the country. It is funny to me that people buy weeds that are in a bale, thinking that they can feed their animals cheap. And others go to TSC and pay 3 times that for one or two bales at a time. I have to order my hay each spring to be sure that I have it in the fall. I don't even ask the price, I trust my guy. Most small farms buy it when then need it and they buy a lot of junk. A person I know that feeds only 1 horse, does not stock any hay. And buys a few bales at a time during the year. When they run out they have asked me. I always plan what I need and add 20 rolls. I don't run out.

I sorry to say, but I think prices will go up higher.