MFA Oil
By Tom May

Common-sense points for choosing a fuel provider

Choosing the right fuel provider for your farm or business seems like a pretty simple task that shouldn’t take much thought. Yet, fuel providers offer many different delivery and payment options and levels of service that should be considered before you make a choice.

The type of fuel you need is the first consideration. Most suppliers offer both clear and dyed diesel fuel and unleaded gasoline, but there are other fuel options suppliers may provide. For example, some retailers support homegrown fuels and may offer one blend of biodiesel while others offer a variety that can be splash-blended on demand. Even a small blend of biodiesel can increase the lubricity in your engine. Another consideration is the grade of diesel fuel your supplier offers. Some retailers offer premium diesel fuel with additives to help prevent gelling while others will blend more expensive #1 diesel.

Available delivery methods are another factor to bear in mind when choosing your supplier. For small quantities, it may be cheaper and easier to pick up your fuel from the retailer at the pump. You will need to inquire what the hours of operation are, or if the pumps are available to you 24 hours a day. For larger amounts of fuel, you may require a tank. Make sure your supplier will lend or rent you the equipment needed. Depending on the size of tank you require, retailers can deliver your fuel by either a standard tankwagon or a 10-wheel truck, which delivers your product straight from the terminal.

Pricing options are another criteria. The lowest cost provider is not always the best provider, so you must explore this area in depth to see what pricing options are available.

The popularity of forward fuel contracting continues to grow. This option offers two primary types of contracts: fixed price and maximum price. With a fixed-price contract, the price is set for the gallons contracted during the contract period, whether or not market prices rise or fall. The maximum-price contract is an agreement that the actual fuel price will be the lower of the contract price or market price at the time of delivery. The maximum-price contract requires payment of a premium, which the fuel supplier uses to purchase the “downside price protection.”

Benefits of the fixed-price contract include being certain of actual fuel cost well in advance of when the fuel is needed, allowing a producer the ability to budget fuel cost. A benefit of the maximum-price contract is the ability to fix the maximum cost of fuel while, through payment of a premium, retaining the opportunity to participate in any price decline at the time fuel is needed.

Payment options vary from company to company. Some retailers offer discounts if you pay cash at the time of delivery. Others offer payment plans that allow you to spread your costs over the planting or harvesting seasons. Another payment option to consider is the retailer’s ability to accept payment by credit card.

Service options can be the key to differentiate suppliers. A supplier should be able to service your tank and equipment and to lend or sell supplies such as hoses, filters and nozzles. Some retailers offer guarantees on their fuel and lab support to test oil samples that help keep your equipment in top shape. Depending on the size of your operation, you may need to have a supplier that can deliver your fuel outside of standard business hours.

Whether the supplier you choose is large or small, ask all the questions to make sure you have the right supplier for your operation. You and your fuel provider should be a partnership that assures your energy needs will be met.

Tom May is director of marketing for MFA Oil

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