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It’s Time to Hold Off


How much did you pay last time you filled your fuel tank? With crude oil prices at 12-year lows, it makes you wonder how much lower prices can go.

Much of the decline in crude oil prices has been tied to turmoil in the stock market. This has been influenced by the major slowdown in China’s economy.

Other factors are also rocking the energy markets. In recent weeks, Congress approved lifting the ban on the export of crude oil from the United States. President Obama signed this as part of the omnibus spending bill. Crude oil exports have already been shipped to Europe and South America.

There’s also big news with the Strategic Petroleum Reserve (SPR), which was created as a counterbalance to Arab oil producers’ power after the energy crisis of 1973-74. In late 2015, federal lawmakers approved provisions to sell millions of barrels of crude oil from the SPR in the coming years. The proceeds will be deposited into the general fund of the U.S. Treasury. (Note: this comes at a time when China is increasing its petroleum reserve.)

What about spring contracting?
With crude oil below $30 a barrel, we’re back to the futures prices we saw when I started at FCA 15 years ago. Who knows where prices might go next?

That’s why I’m recommending you fill your current fuel storage, but don’t get aggressive about contracting spring fuel. Now’s the time to hold off and go hand-to-mouth as we see which direction the energy markets will go.

If you have any questions about this or other energy-related issues, contact your local FCA energy specialist or call me at 877-753-5400. We appreciate your business.

Jim Bieber
Energy Manager 
Office: 877-753-5400
jbieber@firstcoop.com 

See other stories from this month's First Coop Association News:

MANAGEMENT: We’re in This Together
AGRONOMY: Is My Nitrogen Still There?
FEED: Distractions Abound, Stay Focused
GRAIN: Don’t Be the Last to Sell