Jeff Wisnia wrote:
....
I assume the dealers must have entered into futures purchasing contracts
with their suppliers to protect them against further price increases and
those contracts will have to be honored by the dealers unless they
choose bankrupcy instead.

I can forsee that the dealers are going to have a helluva time getting
all the customers who entered into guaranteed price contracts with them
to cough up what they agreed to pay when the retail market price of
heating oil drops significantly. Particularly so if those customers are
being negatively hit by other aspects of the current crazy economy and
use that as a justification to default on their contracts.
....

Southwest Airlines in a nutshell---they looked fabulous early on, now
they're also hurting in spades as their contracted fuel supplies are
still lagging current market prices.

If dealers were wise they didn't forward contract all or had some other
hedge positions. Homeowners may be stuck--that would depend on the
actual contracts.

For farm inputs (diesel, anhydrous, chemicals, etc.) there's a similar
situation/problem. Another is contracted grain to the ethanol producers
as an example. Some have defaulted on those _to_ the farmer or grain
dealers (local equity elevator operators and similar).

The individual homeowner is probably not out more than a few hundred
bucks to perhaps a thou while the others may be looking at up to the
million $$ range for larger operations.

Lack of stability in pricing is in many ways worse than absolute price.

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