Should the Defense Fuel Supply Center Trade in the Futures Market?
Abstract
The Defense Fuel Supply Center is the primary buying agent for most of the petroleum used by the Department of Defense and other Government agencies. Purchasing nearly 200 million barrels of oil per year, the Fuel Center's costs have varied dramatically depending upon the market price of oil. One creative idea for stabilizing costs and reducing price risk exposure is to hedge purchases in the cash market with the use of futures contracts. This thesis examines and assesses the ramifications of futures trading in light of current procurement practices, market conditions, and trends, in an effort to answer the question of whether this proposed strategy is viable or wise. Futures markets, Hedging, Risk management, Fuel prices, Petroleum, Speculation, Utility analysis, Oil markets, Fundamental analysis, Technical analysis, Financial management, Contract management, Reinventing government.
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1993
- Accession Number
- ADA277235
Entities
People
- Brion S. Snyder
Organizations
- Naval Postgraduate School