Frequently Asked Questions

GENERAL

1. What is Fuel Price Protection?
Fuel price protection is an affordable and convenient way for commercial and government fuel users to insulate themselves from volatile pump prices and empowers them to control their fuel expense budget. Your Protection Price is set for a selected fuel type, number of gallons and months. The Protection Price is based on a published index which you can easily track. You may choose either the NYMEX index or the National Average Retail Price (NARP) index. When the index spot price exceeds your Protection Price, you will receive a cash payment for the difference. This payment can be used to offset the additional amount that you are paying at the pump. Your payouts are made monthly throughout the duration of you plan and will cover the number of monthly gallons set out in your plan.

2. Who qualifies for a Fuel Price Protection Plan?
Commercial or government entities of any size. There are no limitations.

3. Who should purchase Fuel Price Protection
Any organization whose fuel costs represent a significant portion of their overall operating budget. Fuel cost per gallon is one of the few expense components of an operating budget that fluctuates from month-to-month. It is out of your control. Fuel Price Protection is invaluable to any organization that is not able to pass on increased fuel costs to their customers or cannot justify fuel surcharges. Stabilizing fuel costs provides budget certainty and creates an effective tool for bidding on contracts that are sensitive to fuel prices.

4. Is this the same as Insurance?
No, Fuel Price Protection is not insurance. Insurance products are strictly regulated and claims need to show damages. However, the motivation for purchasing Fuel Price Protection is similar to buying insurance to avoid the risk of volatile fuel prices negatively impacting your business. Unlike insurance, there is no unwieldy paperwork, no claims process and no waiting for your payment.

5. Is Fuel Price Protection a form of Gambling?
No. The future price of fuel is uncertain, so doing nothing is actually gambling. Fuel Price Protection is the prudent way to proactively manage your fuel expense with cost certainty and guard your firm’s profits from exposure to fuel price increases.

6. Am I Price Protected against all Grades of Gasoline?
You are free to fill up with any grade of gasoline. You are Price Protected against a benchmark Index that tracks Regular Unleaded gasoline price movements. Higher octane grades of gasoline typically move in lockstep with regular unleaded gasoline so your plan offers very good Price Protection for any grade of gasoline.

7. Am I stuck with my Protected Price if Pump Prices go down?
Your Price Protection Plan allows you to buy fuel as you currently do. If fuel prices decline at the pump you get to enjoy the cheaper prices. However if gas prices increase from your Protected Price, you will be paid out the difference. You get the best of both worlds.

8. Do I need to carry another Fuel Card?
No. Fuel Bank Price Protection is cardless. No need to order and carry another fuel card. You continue to use your existing fuel card.

9. Can I trust Fuel Bank?
If you are happy with the quote, INTL Hanley, LLC, will open an account at no cost and establish a contract with you at the agreed Strike Price. Details will be emailed to you.

10. What are the accounting and tax implications of Fuel Price Protection?
You will need to consult with a qualified accountant to review how to treat Hedge Accounting (referred to as FAS-133 for publicly traded companies).

11. Does Fuel Price Protection affect the way I currently buy fuel?
No, Price Protection is a financial product and is not connected to the physical consumption of fuel. You should continue to purchase your physical fuel from a reliable vendor with the most competitive price and volume discount. Your monthly payouts are made against a published index, not on physical fuel consumed. You retain the freedom to purchase fuel at any location nationwide or in any other manner that you currently use without impacting your Price Protection Plan.

12. Why not just pass on a Fuel Surcharge ?
There is widespread industry objection to fuel surcharges. Firms are uncomfortable with bearing the burden of rising fuel costs and want to know exactly what their costs are going to be. Fuel Price Protection provides you with a distinct competitive advantage. You can offer your customers a fixed price while your competitors need to stack their bids with variable fuel surcharges.

13. Do I have to prepay for my fuel needs?
No. Fuel Bank Price Protection only requires you to pay a one-time premium as small as 15 cents/gallon for 3 months protection which is a fraction of pump price.

14. Can I use Fuel Bank Price Protection if I am not located in the United States?
Yes, whether you are in Canada, Mexico, Carribbean, or elsewhere you are protected against a globally trusted fuel price index (NYMEX). Transactions will be conducted in US Dollars.

LIMITATIONS

15. Is there a minimum volume requirement?
No. Any commercial, government or agricultural entity qualifies, for a volume as small as 1 (one) gallon per month.

16. Is there a minimum/maximum Price Protection Term?
Yes. The minimum term is 3 months. You may Price Protect 3, 6 or 12 months. Terms longer than 12 months are available upon request.

17. What types of fuel are covered by Fuel Bank Price Protection?
Gasoline (all grades), Diesel, Marine Fuel, Jet Fuel, Aviation Gasoline, Red Diesel (agricultural), and Commercial Heating Oil.

HOW IT WORKS

18. How does Fuel Price Protection work?

a) Decide:

Fuel type (gasoline, diesel, marine fuel, jet/aviation fuel) for which you want protection.
Monthly gallons to be protected
Protection term – choose 3, 6 or 12 months
Which index you would like to be protected against (NYMEX or National Average Retail Price)

b) Get a Quote either online or by phone. This quote will indicate your Protection Price based on your answers to Q1 above.

c) INTL Hanley, LLC, will contact you re-confirming the details of your Plan and your Protection Price before execution.

d) Complete the paperwork and open an account.

e) Pay the Price Protection Premium by ACH, MasterCard/Visa, or by charging your pre-authorized account, within 24 hrs of execution of your Plan.

f) Receive monthly payouts when your chosen published index rises above your Protection Price.

19. How do you know how much fuel I use?
You tell us how much fuel you use when you Get a Quote online. Our web tools are designed to help you estimate your fuel consumption.Your monthly payouts are based on your estimated monthly fuel volume. So there is no claims process, no paper work, and no wait.

20. What if I don’t consume the volume of fuel I estimated?
You will be paid out regardless of what you physically consume. Your payout will be made on the volume estimate in your plan, not on what you actually consume

21. What protection term should I choose?
Choose between 3, 6 or 12 months. You may protect for longer than 12 months on request. Some customers select a 12-month term to match their budget cycle. Others select a shorter term to provide protection for peak periods.

22. Do I have to Price Protect all of my fuel consumption?
No. You may decide to protect only a certain portion of your fuel consumption (e.g. 25%, 50%, 75%) depending on your aversion to risk or seasonal buying pattern.

23. Do I get a discount at the pump?
No. You still pay the market pump price but you receive offsetting monthly payouts for every month that the published index is higher than your Protection Price.

24. Do I have to keep my fuel receipts ?
No, you do not have to turn in any receipts to receive your payouts. Your payouts are based on the terms of your Fuel Price Protection Plan, not what you paid at the pump.

COST

25. How much does Price protection cost?
Fuel Bank Price Protection costs a one-time premium of 5 cents/gallon (3 months), 10 cents/ gallon (6 months) and 15 cents/gallon (12 months). There are no registration fees, no hidden costs and no surprise charges. Quotes for different terms available on request.

26. How do I pay for Fuel Price Protection?
You pay by Interbank Transfer (ACH), MasterCard/Visa, or by charging your pre-authorized commercial account with FCStone Trading LLC.

PUBLISHED INDEX

27. Should I choose NYMEX or National Average Retail Price (NARP) index as my Price Protection benchmark?

Both of these published benchmarks are transparent, verifiable, and can be trusted. We provide you with historical data for either index to show past trends.

a) We recommend NYMEX because it is an index settled and published daily by the New York Mercantile Exchange. NYMEX represents the New York Harbor fuel price and is the core moving part of volatile fuel prices. NYMEX excludes all taxes and is therefore a lower number than you are used to seeing at the pump. The daily NYMEX price index may found at the following links:

Gasoline (Symbol RBOB)
http://www.cmegroup.com/trading/energy/refined-products/rbob-gasoline_quotes_settlements_futures.html

Diesel, Marine Fuel, Jet/Aviation Fuel (Symbol HO)
http://www.cmegroup.com/trading/energy/refined-products/heating-oil_quotes_settlements_futures.html

b) National Average Retail Price Index (NARP) is usually published every Monday by the U.S. Department of Energy. NARP is based on a survey of gas stations across the United States, which is used to calculate a weighted average price using sales and delivery volume data and population estimates. Tax rates change from state to state and the average tax rate used by NARP may differ from the tax rates applicable to your state. The weekly NARP may found at the following link:

http://tonto.eia.doe.gov/dnav/pet/pet_pri_gnd_dcus_nus_w.htm

28. How do I track the NYMEX and National Average Retail Price (NARP) indexes?

a) The daily NYMEX price index may found at the following links:

Gasoline (Symbol RBOB)
http://www.cmegroup.com/trading/energy/refined-products/rbob-gasoline_quotes_settlements_futures.html

Diesel, Marine Fuel, Jet/Aviation Fuel (Symbol HO)
http://www.cmegroup.com/trading/energy/refined-products/heating-oil_quotes_settlements_futures.html

b) The weekly NARP may found at the following links:

http://tonto.eia.doe.gov/dnav/pet/pet_pri_gnd_dcus_nus_w.htm

http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

PAYOUTS

29. How is my monthly payout calculated?
Your chosen benchmark index (NYMEX or National Average Retail Price) is averaged each month and is published in the first business week of the following month. If this Average Index is greater than your Protection Price, you will be paid an amount equal to:

Your Protected Gallons for the month x (Average Index less Protected Price)

If the Average Index is less than your Protected Price, there will be no payment due.

30. When do I know if I will get a payout and how much it will be?
After the monthly Average Index is published during the first business week of the following month, you will be paid the amount due by your chosen method. Details will also be sent to you email.

31. How will my monthly payouts be made?
You may choose your method of payout. Either Interbank Transfer (ACH), MasterCard/Visa, credit to your account or by check.