Please find enclosed an article that we believe commercial fishermen will find beneficial and informative in regards to their fuel costs As you know, we are all feeling a budgeting crunch, and we think this article will peak your fishermen’s interest in a solution that TGG Capital has proven to be the answer in this volatile market.

The article helps your fishermen make an intelligent and logical choice in how they cap their fuel costs.

You may feature the article in its entirety, or you may choose to use any portion of it. TGG Capital has Mr. Bernanek’s written permission to use his published article as we deem fit.

Should you have any questions, or concerns, please give me a call. I will be glad to be of assistance.

Michael Machovec
Senior Fuel Consultant
TGG CAPITAL
(760) 697-1033
Michael@tgg-capital.com

PRICE CAPPING IS THE SOLUTION

By Robert Beranek

For 50 years, the “Big Boys” – cruise ships, the airlines, trucking companies, and city governments – have had a secured program in place that has protected them for skyrocketing increases in oil and diesel fuel prices.

The consumers of millions of gallons of diesel fuel monthly have been able to cap their costs over an extended period of time. The smaller buyers of 5K, 10K, or 50K gallons of fuel per month have been at the mercy of the vast fluctuating costs that have swung, each year 50%+, over the last nine years.

In 2008, a Southern California accounting firm (TGG Capital) worked for a client of a medium sized trucking firm on an alternative means of budgeting their fuel prices to become more price competitive. This firm found a means to protect their clients from the volatile market price swings in diesel fuel that occurs yearly.

But, let me digress for a moment and explain how the market works. The New York Mercantile Exchange (NYMEX) is the world’s largest physical commodity futures exchange. Crude oil is the largest traded commodity in the world – trading over 80 million barrels per day. NYMEX will hold (x) number of barrels of fuel for a pre-set length of time at today’s prices. The longer it is held, the more costly the premium.

According to spokesperson and Managing Director of TGG-CAPITAL, Trever Acers, his company has created a program that pools small and medium sized companies together so that options can be bought to satisfy each users needs. Trever is quoted as saying, “this is a very simple and a bit boring way of capping diesel costs.”

At this time, it must be explained that there are two ways to cap fuel prices. The first is called “fixing.” This means that a company agrees to pay a set price, day in and day out, for every gallon of diesel used. This is beneficial if the price goes up, but costly if the price drops below the fixed price.

The second way is called, “capping.” This is where the maximum price paid is the spot price agreed upon in a contract. For example – let’s use $2.00 per gallon x 10K gallons per month x 12 months…if oil/diesel goes up 10% on the average for the month, the your company would get a rebate check for the 10% difference. If the price goes up the next month on the average of 6%, the your company would get a rebate check for the 6%. Your company would win. Now – if the third month the price drops 10% below your capped price, Your company would pay the lower spot price. Your company would pay less then they budgeted for…they would win again.

“With the program, the customer does not have to change where or how they purchase their fuel. No fuel changes hands,” according to Mr. Acers. “Currently we are working with many school districts, trucking and bus companies, commercial fishing and tugboat operators, and their interest is overwhelming – all due to the budgeting crunch that we are all facing today.”

Should you have any questions, or need further information on capping your fuel costs, please contact:

MICHAEL MACHOVEC
SENIOR FUEL CONSULTANT
TGG CAPITAL
760-697-1033
Michael@tgg-capital.com

I stumbled across your blog during research for my work photographing commercial fishing and I am really enjoying your writings.

I am planning a trip to Oregon and Washington for late December and early January and I’m looking to connect with fishermen that wouldn’t mind having an extra person on board (who takes great pictures and doesn’t get sick). I’d be very grateful if we could have a chat about that whenever you have some time.

You can see some of what I’ve been up to here:

Hope to hear from you,
-david

What a nice surprise! I think fishing nostalgia is in the air right now and it’s thicker than usual for some reason. It must be the summer season!

I will watch for the grand opening of the roaster/mercantile and follow the progress. And didn’t I hear or read someplace that you were engaged?

It’s so great to “hear” from you!!

Your old fishing pal,
Jen

Hey, I still wax nostalgic about my years fishing. It’s nice to remember every once in awhile. It was really nice to see you a few years back at the Fisher Poet’s Gathering in Astoria and catch up. Hope your family, and especially your sister Cassandra are doing well. Over the last 16 month’s, I’ve been renovating an old Victorian mercantile – you can look at some of the intitial progress on my website (www.jmchandler.com). We’ll be opening a small coffee roaster / mercantile in the next few months! I keep wanting to go back and fish, but after being on the beach @ Pacific City and seeing the little kid get his arm cut off by the flat bottom dory, I’ve had second thoughts. Also, I was hit by a car on my motorcycle a few months back, and the arthritis is probably the true limiting factor of my ability to be on the water for any sustained period without turning into a whimpering old man. Maybe our paths will cross again? Maybe once we start roasting we’ll throw a bag or two your way?

They certainly earned my respect!