Finding Some Predictability in Diesel Prices

Prairie Gleanings

Growmark's John Cripe suggests a simple plan for purchasing diesel.

Published on: March 29, 2009

Last week, Growmark hosted its second annual Media Day. Division managers took time to present an overview and answer questions.

 

For two divisions, fertilizer and grain storage, managers noted that a wait and see attitude really paid off this year. However, John Cripe, manager of the energy risk management division, says diesel prices are following a longstanding price trend.

 

According to Cripe, 90% of the time, petroleum prices will bottom out sometime between December and February. Last year, the trend was further exacerbated with the recession. Cripe remembers mid-July oil prices at $147 per barrel. In 90 days, the price had fallen to $40/barrel.

 

According to Cripe, diesel demand is currently down 5% to 10%. However, gasoline demand is holding steady. As for the coming year, expect the usual summer price spike. But, it shouldn't be as bad as last year. Cripe anticipates gasoline at $2.50 to $3 per gallon by Labor Day, which tends to be the price peak.

 

Other than that, Cripe says fuel pricing is fairly simple. All you need to know is: prices peak near Labor Day and bottom out in the winter. Purchase according to this schedule and Cripe says you'll be correct 90% to 95% of the time. Cripe suggests locking in at least 50% of your fuel supply during the winter.

 

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