H E DG ING
spread out to match heat load demand patterns, but the required volumes were high, Daoust said. When the curve was first implemented in 2004, it was for a mini- mum volume of 210,000 gallons, Daoust recalled. That sizeable minimum meant that a large number of homeowners needed to be grouped together. Locking in forward price contracts under those circumstances could be an anxiety-provoking task. "It was risky to decide whether to buy
wet barrels before a sale to the customer, or make the sale first and then buy," said Charlie Uglietto of Cubby Oil in Somerville, Mass. "I could never seem to find a way to quote and hedge a customer at the same time. Meanwhile the market kept moving." Over the years, Sprague drove down
the minimum purchase quantities from 210,000 to 126,000 to 84,000 gallon incre- ments. Now the curve allows dealers the chance to lock in a weighted average pur- chase price for as little as 1,000 gallons over a variety of different winter delivery schedules – essentially one customer at a time, Daoust said. Uglietto said the small increment "has
already changed the way I handle my price protection program. My sales staff uses the system to generate a price quote for a cus- tomer without worrying about a volume mismatch, and with the click of a button, my order gets filled." The flexibility afforded by the pro-
gram can help oil dealers strike a deal with a customer where previously they might not have been able to, said Dennis Koch of Lipton Energy, Pittsfield, Mass. "A customer recently missed one of our pre-buy pro- grams, but wanted to buy-in," Koch recalled. Using the small volume feature, Koch said, "I was able to offer him a deal for 2,500 gal- lons. He agreed, paid me by credit card and I turned around and locked in the confirma- tion with Sprague. It was simple for me and resulted in a very happy customer." In March, Sprague added an instant mes-
saging (IM) or "chat" feature to the online service, enabling dealers to bid, negotiate and close a deal via IM, said Grant Brown, vice president of investor relations and mar- keting. "It connects with our folks on the
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trading floor," Brown said. "That allows them to go back and forth, and talk about the bids and pricing in real time." Of the online purchasing capability gen-
erally, John Cook, president of C.E. Kiff, said, "You get a real-time, live-market quote without having to call someone and wait
for their return call. You can just log onto the website and all the information is right there." That is helpful when looking at for- ward months, Cook said. "If it's December and you want to contract something for February or March," he said, the real-time market price is visible. "You can buy it at the
