So you’ve just followed instructions to “insert
card, remove quickly” at the gas pump and are
standing there watching the money being removed
quickly from your bank account. You think, “There
has to be a way to get ahead of this curve.”
Imagine if you were Metro Transit, which burns
10 million gallons of fuel each year. As is
the case with other savvy users of lots of fuel—airlines,
bus companies, fleets of taxi cabs—Metro Transit
avails itself of the services of a smart guy
named Jeff LeMunyon, who heads up a company
called Linwood Capital Management LLC in Edina.
LeMunyon is an energy price-risk management
consultant, and buys and sells futures contracts
for millions of gallons of fuel for Metro Transit
locally and other clients around the country.
Over the years, he has saved them more than
$4 million by buying diesel futures contracts
when prices were low, then cashing in on those
gains when it came time to burn the fuel when
prices were much higher—thus offsetting the
generally skyrocketing price of fuel.
So why should you, reading a column on personal
finance, care what someone like LeMunyon does?
Because average investors can run with the big
boys on this, potentially blunting their own
pain at the pump.
In times of inflation, financial assets tend
to suffer, because the buying power of a dollar
or a yen or a euro declines. But the value of
the things those dollars buy—whether it’s timber,
copper, gold or, yes, oil—tends to go up.
With that said, in Minnesota, it’s possible
to lock in the price of your fuel, even as ever
higher prices get posted at the SuperAmerica
down the block. You do it by depositing money
at First Fuel Banks in St. Cloud.
First Fuel Banks has been around since 1982.
Over the past 24 years, it’s grown to operate
six locations in the St. Cloud and Monticello
area, and attracted media attention from all
over the world. For a $1 lifetime membership
fee, First Fuel’s nearly 10,000 members can
open an account, locking in the price of fuel
when they deposit their money
“To our knowledge, there’s nothing like this
in the U.S., if not the world,” says Jim Feneis,
CEO and cofounder with his brother, Dan, of
First Fuel Banks. “Basically, you are depositing
cash and withdrawing fuel. We’ve had deposits
of as little as $3 and as much as $400,000”
from customers who are individual consumers
and operators of large fleets of commercial
vehicles. No small number of his customers,
Feneis says, are people from the Twin Cities
and environs south, who typically frequent his
filling stations during the summer cabin season.
Obviously, the risk is that fuel prices could
go down after you’ve locked in your price, requiring
you to buy your fuel at that higher price until
your deposit is used up. “If you’re bullish
and believe that prices are going to go up,”
Feneis says, “you deposit more. If you’re bearish,
you deposit less.” Lately, he’s seen an uptick
in new members and deposits in existing accounts;
interest seems to jump anytime gas prices go
up 30 cents or more a gallon, he says.
While First Fuel’s customers can benefit—or
not—from higher or lower gas prices, Feneis,
like LeMunyon, has had to become highly skilled
at buying and selling futures contracts to hedge
his own investment in his substantial inventories.
››› As always, my advice is to diversify,
diversify, diversify. All of your choices
need to fit together in one big, integrated
plan. But yes, there’s an investment for everything—even
for doing battle with the new one-armed bandit:
the gas pump.
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