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32 MAY 2016 | FUEL OIL NEWS | www.fueloilnews.com and significant moves common before fracking oil production gluts, the Saudi price war and the recent derivatives reforms, the same cannot be said for propane, noted Larkin. "The one place I do see the participation of hedging activity going up quite a bit is in propane," he said. "Propane is more volatile than it's ever been. It used to be nice and stable, and you would barely see the price move throughout the year. They are generally following the same path that oil did from the 1980s into the early 2000s when the Merc got introduced and oil became a commodity." INTIMIDATION FACTOR Some resistance to hedging, or exploring the options that might be available, undoubtedly involves how intimidating the commodities markets and the risk mitigation tools and strategies can be to those who are unfamiliar with them. "I think smaller dealers sometimes get intimidated by the topic itself, but in reality it's not that complicated," Larkin said. "I always compare things to the farming industry—right down to the small farmer who hedges his crop every year." Larkin noted that there are a range of educational opportuni- ties open to those in the industry to get a firmer grasp on hedging and how it can be applied to a company's business model. "There are seminars out there—we put them on as well as others," he said. "You can go online, you can get your feet wet fairly easy. Obviously I'm a bit biased, and I think hiring somebody like us as a consultant to walk through the process is a really good way to go about it." Larkin noted that when he started his business 20 years ago, he figured that once the customer learned the basics their need for a consultant would drop off. "In fact, it's worked out quite the opposite— having somebody as an advocate all the time seems to be very helpful," he said. "But I don't believe the concepts are that hard to learn, and once somebody gets it, it's not that intimidating." Nor does a company have to fully commit to hedging right away to explore the concepts, and certainly not for 100% of its gallons at any point. "You don't have to hedge 100% of the gallons by any means— nobody does," Larkin said. "And with today's products you don't have to work in those 42,000 gallon contract increments, which I think a lot of smaller dealers might be afraid of. We can hedge 20,000 gallons over a year. The volume component doesn't kick someone out of the opportunity." Skaparas noted that a 100% rack plus company doing, say, 500,000 gallons of business might start with 5,000 gallons to see how it works. "I always tell people do some small trades so you get used to the paperwork and get comfortable," he said. "You can go to all the seminars in the world but until you actually wire some money over and get confirmation—that is the real deal. It's remarkable how quickly you learn in that environment when dol- lars are on the line." l F O N TO HEDGE NOT TO HEDGE or