dpb wrote:
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.


Southwest's average hedge for oil is $51/bbl. As long as oil stays above
that price, Soutwest is golden.
http://www.kiplinger.com/columns/pic...8/pick0611.htm

This is not forever, though, Southwest's options will run out... about the
same time as the price of oil drops back to reasonable.

However, there is the unforseen: Obama could re-instate the ban on offshore
drilling and the price of oil will jump back up by 100%.

Southwest, by the way, was not the only airline to insure their costs.
Continental and other carriers did the same. But when a minor cash-crunch
hit the airlines about a year ago, these companies sold their futures
contracts to raise cash.