of heating degree days are packed into a very limited time period. Hence the importance of how many days you are spending at your desired margin levels. In other words, every day counts. Because every day is volumetrically weighted, it is vital that margins are optimal at the optimum times. Another way of looking at it: for every day you miss your target margin in January, you need three days in April to make up for it due to the smaller sales volumes. Once the client is aware of this, they are motivated to correct their course. This is the power of data in a visual format.

Another example below( chart b) shows the client’ s margins as the retail and rack price changes day to day. What becomes clear over time here is the accordion effect on margins and the obvious lag in pricing as the rack price moves up and down. This behavior is ubiquitous across the industry. Energy marketers are typically slow to move prices up when necessary; but also tend to drag their proverbial feet on the way down. Just another example of pricing trends and how changing both purchasing habits as well as pricing can dramatically improve margins when it becomes clear

Chart B what the cause and effect is. Please feel free to reach out to me with any questions or comments. l FON

Rich Larkin is president of Hedge Solutions( www. hedgesolutions. com). He can be reached at rlarkin @ hedgesolutions. com.

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