Propane Suppliers Hedging Strategies & Risk Management

This is not your grandfather’s propane market! Dramatic shifts in the propane space has significantly altered the strategies we use to hedge and purchase product. We show our propane clients how to realize substantial cost savings based on the hedging strategy they choose. Whether you are managing fixed or capped price agreements, or seek to avoid margin erosion due to volatile price swings, we can help you achieve your hedging objectives.

A consulting relationship with Hedge Solutions targets four key areas to insure a successful energy risk management strategy:

Information

We are your eyes and ears in the marketplace. Our daily newsletters, Propane Spot, Pipeline and Evening Energy Report, keeps our clients up to date on the latest energy prices and news from the marketplace. We track fundamental information on a weekly basis, analyzing changes to supply and demand that could impact your prices down the road.

Planning

Deciding on a propane hedging strategy may be the most important decision you make for your business. We’ve developed powerful tools that will identify the risks to your P&L, and project the impact of market fluctuations. Next, we can apply a variety of hedging strategies, running “what-if” analysis to determine which plan will best mitigate the risks you face. We can take the mystery out of those questions. Once you’ve chosen a strategy, we will project your margin performance forward over the next fiscal year using our proprietary software, Hedge Insite. What is unique about the Insite propane model is that you can customize how the forward propane price curve is calculated as well as the basis projections.

Our Lodestar system provides a blue print with a detailed schedule on exact quantities to buy and what strategy to use. It is a virtual road map to keep you on point while preparing for your program offerings.

Execution

This is an area where the best intentions can go astray. Properly executing an energy risk management strategy can make all the difference in a successful hedge program and impact gross profits. Again, the Lodestar system helps guide you through the execution protocols and ensures a disciplined adherence to your game plan.

Accounting

As you move through the year, we track exactly how your margins are performing relative to expectations using our proprietary management software, Hedge Insite. Have consumption rates changed? Is basis behaving? We can evaluate where you stand in “real time,” providing opportunity to make changes as needed so you meet or exceed your target profits.

Our energy procurement consulting services don’t stop there. We view the relationship with our clients as a true partnership, providing advice on a variety of other areas, such as contract negotiations and business expansion. We’ll review your procurement practices and make recommendations on how to manage your product acquisition. We’ll review your supply contracts, discuss your allocation and supply portfolio? How many suppliers should you have based on the volume you sell. Where are your suppliers’ assets located? How are they supplied; via rail, pipeline, truck? A carefully prepared and comprehensive supply portfolio is crucially important to maintaining supply lines at critical times. All of this is included in your monthly consulting fee.