212 comments on DrumBeat: July 8, 2008
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212 comments on DrumBeat: July 8, 2008
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Buy a gas station for the tanks.
Fill 'em up out of a tanker farm.
You can't buy futures cheaper than actuals now.
$140 out a 2013 seems like a steal, and no mucking about with the real world black stuff.
Mind you, buying a defunct station also sounds like an interest proposition, although I'll guess the tanks only have a finite life? A petrol station, a forest, some farmland - I wonder if there is anywhere where these are all close together?
The trouble with buying futures is the counterparty risk. If things are as bad as I think they might be by 2013, I'm not sure who'll be around to honour such a contract.
See my longer post below. If you are long and the price rises you can withdraw your profits. The market works this way precisely to reduce counter party risk. I agree that a contract requiring delivery of $140 oil in 2015 might not be honored if it is $500 then but if you are attentive you should have withdrawn most of the gain before the expiration date.
Thank you for your reply.
In today’s uncertain financial environment, it is essential to avoid counterparty risk wherever possible.
As opposed to performance risk-"mucking about with the real world black stuff."
A petrol station, a forest, some farmland - I wonder if there is anywhere where these are all close together?
Yes, there is. But I'm there already. 8D
BTW your statement reminds me of a Yazoo City, MS-Capital of Kudzu- joke.
Considering old gas stations on US HWY 49, the best way to mulch kudzu is with used oil and cinder blocks. 8D
You are taking the same counterparty risk buying the real stuff and storing it until 2013. People will take your money now, and sell you oil, but will the guy who comes to get the oil in 2013 bring you any money?
The risk may be higher or lower with actuals vs. futures, I don't know, but it's the same type of risk, and shouldn't be written off.
No. Because you've got the actuals in hand.
It's now "performance" risk. And who's talking about a guy coming in 2013?
And while you're waiting, you use it yourself( more on request).
The only way you get hurt is you can't afford to store it.
And if you can't afford to store it, you shouldn't be in the market anyway.
8D "mulch kudzu is with used oil "
lots better uses: some mixed w/ diesel, siphyon thru a fiber rope to clean & reuse,... then again can't eat those things; course u can mulch kud w/ lots of things.
KUDZU,
Coming to a "Filling Station" near you, soon:
http://domesticfuel.com/
http://www.firstfuelbank.com/history/default.asp
The First Fuel Bank in Minnesota, founded in 1982, lets their 8,000+ members lock in to fuel at present-day prices. I wonder what portion of their account holders are peak-oil aware?
mcgowanmc -
If you buy an old gas station for the tanks, just be careful: you could also be buying yourself a very expensive chunk of environmental liability if the tanks at some time in the station's history leaked and contaminated the surrounding soil and/or ground water. If I recall correctly, as of circa 1990, on average something like 50% of all underground storage tanks 20 years and older have had some sort of leakage problem.
During the later 1980s and early 1990s there was a major effort to remove old underground storage tanks, replace them with better protected tanks, and to remediate any site contamination. So, many stations could be in better shape than most used to be. It's been a while since I was in the environmental consulting business, but I think that in all or most states at this point in time periodic testing of underground gasoline tanks are required. Such records should be available for a reputably run station, as should records of any contamination studies and clean-up efforts.
Just be sure to know what you're really buying.