garfield Posted February 12, 2011 Share Posted February 12, 2011 Rigs to two the equipment trailer and kitchen trailer, Box trucks, large vans, vehicles to tow souvenir rigs, etc. - Their mpg is around 6 - 8 mpg. With 6-8 additional vehicles, it works out to be about 1 gallon of fuel per mile for the fleet. You are correct - fleets embed a margin of saftey into their contract to protect themselves against fuel price volatility. It is difficult for corps to hedge fuel as well, given that 1) diesel fuel hedges are relatively new and not as liquid as oil hedges (i.e., options on futures), 2) oil hedges correlate well with diesel if you look over a longer tie horizon - over the 2+ months corps are exposed, there is not a great correlation, so the hedges are not always effective, and 3) the minimum contract is for more fuel than a corps uses over the cors of the summer, so a single contract will put a corps in an overhedged position - not where you want to be. Lastly, the premium on a single fuel hedge is expensive. Umm...No, it works out to be 6 to 8 mpg for the fleet. The bigger the fleet the more fuel it uses, but it still works out to 6 to 8 mpg. Not sure where you get your figurin'. Quote Link to comment Share on other sites More sharing options...
garfield Posted February 12, 2011 Share Posted February 12, 2011 (edited) Rigs to two the equipment trailer and kitchen trailer, Box trucks, large vans, vehicles to tow souvenir rigs, etc. - Their mpg is around 6 - 8 mpg. With 6-8 additional vehicles, it works out to be about 1 gallon of fuel per mile for the fleet. You are correct - fleets embed a margin of saftey into their contract to protect themselves against fuel price volatility. It is difficult for corps to hedge fuel as well, given that 1) diesel fuel hedges are relatively new and not as liquid as oil hedges (i.e., options on futures), 2) oil hedges correlate well with diesel if you look over a longer tie horizon - over the 2+ months corps are exposed, there is not a great correlation, so the hedges are not always effective, and 3) the minimum contract is for more fuel than a corps uses over the cors of the summer, so a single contract will put a corps in an overhedged position - not where you want to be. Lastly, the premium on a single fuel hedge is expensive. There's not reason to buy the futures option. The VIX on USO (OVX) has a short volatility timeframe (30 days), and a 2.7:1 cover ratio on long positions of both can protect against price spikes as well as provide a positive return over costs if the 50 day Moving Average trends above the 200 day for USO. This is a cheaper "hedge" (though not really a hedge) against short-haul diesel spikes used by most LTL carriers around the country, regardless of the region. Edited February 12, 2011 by garfield Quote Link to comment Share on other sites More sharing options...
skewerz Posted February 12, 2011 Share Posted February 12, 2011 Umm...No, it works out to be 6 to 8 mpg for the fleet. The bigger the fleet the more fuel it uses, but it still works out to 6 to 8 mpg. Not sure where you get your figurin'. 8 vehicles at 8 mpg = 8 gallons of fuel every 8 miles....8/8 = 1 mile per gallon total. Quote Link to comment Share on other sites More sharing options...
garfield Posted February 12, 2011 Share Posted February 12, 2011 8 vehicles at 8 mpg = 8 gallons of fuel every 8 miles....8/8 = 1 mile per gallon total. OK, got it. You're talking about total consumption, not efficiency. I get the point. So a 10cent increase per gallon is $1,200 more for the whole corps to do a 12,000 mile tour. Mea Culpa Quote Link to comment Share on other sites More sharing options...
skewerz Posted February 12, 2011 Share Posted February 12, 2011 (edited) OK, got it. You're talking about total consumption, not efficiency. I get the point. So a 10cent increase per gallon is $1,200 more for the whole corps to do a 12,000 mile tour. Mea Culpa yeah...George's estimation was off by a decimal point...a rather significant decimal point. I've realized that no one has any kind of logical thought whatsoever...I get dinged a point because I spoke the truth...that proves that audience vote for points wouldn't work...really? no....really? look past your naive idealism, and look to fact and logic...he was off by $10800 dollars per $0.10... Edited February 13, 2011 by skewerz Quote Link to comment Share on other sites More sharing options...
Stu Posted February 13, 2011 Share Posted February 13, 2011 What's the difference between leasing a bus for 4 months and chartering one for 4 months? Blow a tire: Lease = Corps Problem vs Charter = Charter Company Problem. Break Down: Lease = Corps Problem vs Charter = Charter Company Problem Drivers: Lease = Corps Provides Drivers vs Charter = Charter Company Provides Drivers. Would you like me to continue? Quote Link to comment Share on other sites More sharing options...
Howdy Posted February 13, 2011 Share Posted February 13, 2011 And these costs can really add up fast. In 2008 when I was with Pioneer I handed a bus repair garage a check for $3,200.00 for towing a bus two different times [ approx 50 miles per tow] , and that was before any repair costs. Pio had several bus/semi breakdowns that summer. I personally have been on tour when several buses wrecked, I was in the front seat of a North Star bus that was totaled in 81 at 3 am when it plowed into a dump truck because the bus had no breaks. North Star also had a second bus go down, and their semi truck was in a wreck and broke down a few times. In 82 I was on a Spirit of Atlanta bus whose back wheels came off. I know in 08 several fuel stops tiped over $3,000.00 in fuel just for one stop. Please think about donating a little fuel money to corps this summer. Quote Link to comment Share on other sites More sharing options...
garfield Posted February 13, 2011 Share Posted February 13, 2011 (edited) Blow a tire: Lease = Corps Problem vs Charter = Charter Company Problem. Break Down: Lease = Corps Problem vs Charter = Charter Company Problem Drivers: Lease = Corps Provides Drivers vs Charter = Charter Company Provides Drivers. Would you like me to continue? Oh come on, Stu. If your connotation were correct, then why in the world would leasing companies survive and be in business? Blown tire: Lease = Corps' problem. Charter = the charter company eats the cost and still charges the corps the same cost as a lease? Really? You think that's how it works? Ditto for the rest of your assertions. The rationale doesn't make sense. And before you suggest that the charter company can spread maintenance costs over many vehicles and therefor it's cheaper, remember that the charter company has to spread the initial cost of each bus over the whole fleet as well. I guarantee you that the charter company knows a heck of a lot better than a corps' travel director when maintenance is due on the bus, and how many miles the bus can go before a hose is due to crack or a belt is due to break. Those costs, and their estimates, are built into the cost of the charter. What you're talking about is RISK, and risk has costs. And I'd bet you a cheap lunch that the average corps volunteer driver with a CDL knows a heck of a lot less about the maintenance schedule on a leased bus than does the maintenance director of a charter company. The corps volunteer makes a judgement about the equipment and the likelihood of a breakdown; the charter maintenance supervisor knows exactly how that equipment has been cared for. The corps that leases assumes the risk; the corps that charters pays to lay that risk off on the charter company. Sure, a leased bus may beat the odds in any one season and let the corps off with no disasters, while the charter company is going to build that expectation into the cost of the each charter. But the laws of regression to the mean suggest that a corps which leases over time will pay for the risk soon or later, and the overall costs will end up about the same. In the end, the cost per mile of the using the equipment is the same, whether the corps leases and pays for those costs out of their pocket or the charter builds it into each contract. And I would contend that a charter company that adds profit to every part of the service contract will charge more for each belt, each service call, each tire that what the corps travel director will pay for the same equipment himself, making the charter, with costs all in, MORE expensive than leasing over time. Howdy's original contention was that higher gas prices will affect corps that own their equipment more than it will corps that lease/charter. Don't tell me you agree with that assertion, too?! Edited February 13, 2011 by garfield Quote Link to comment Share on other sites More sharing options...
thirdcoast Posted February 13, 2011 Share Posted February 13, 2011 With the bigger corps driving up the costs of fielding a corps and now gas prices expected to go over $4 and possibly $5 per gallon, What are corps doing to keep the activity financially viable? Dave, Dave, Dave, good to see you back. We have talked about this before, look at the miles, that crazy schedule, did you see that map? I think these Corps must be pretty well off money wise or DCI wouldnt let them do that crazy tour. They have to be well off or it wouldnt happen. I wonder what the budget just for 1st tour will be. Crazy money times 8. So its not a money issue. IMO. Quote Link to comment Share on other sites More sharing options...
Stu Posted February 13, 2011 Share Posted February 13, 2011 Sorry, garfield, but the charter deal where the charter company is responsible for the buses is correct (and it costs around $1000 per bus per day to charter). It is much like, not exactly like, but much like leasing a car from a dealership vs renting a car from Hertz or Enterprise. When you lease a car "you" are responsible for "everything"; but when you rent a car who is responsible for the maintenance and anything related to the "car"? The Rental Company. When XYZ High School Band charters buses to take their kids to Disney World, who provides the bus driver? The school district? Nope; The Charter Company. Who takes care of the bus maintenance? The School District? Nope; The Charter Company. Who is responsible in case of a traffic accident? The School District? Nope; The Charter Company. The same holds true for a corps when the corps (charters) buses. 1 Quote Link to comment Share on other sites More sharing options...
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