Let’s Talk Tariffs

Unless you live under a rock or North of Hwy 64, like me, I am sure that you have seen an article or heard a news report about the US/China trade war.  Talk of new tariff’s on Chinese goods have been in and out of headlines since the initial tariff taxes of 10% on most goods were imposed last fall.  But last week this trade war ramped up to the next level when trade talks stalled, and an additional 15% tariff tax was added to goods that were already carrying the initial 10% from 6 months ago.

Although there has been a great deal of “tariff talk” lately, some may not exactly understand what a tariff really is and how it will affect our industry.  Everyone has their own opinion, mostly depending on their political affiliation.  So, rather than quoting a bunch of headlines from CNN to Fox news, let’s just do a brief dissection of the meat of this trade war so you can form your own opinion!

Let’s start with….

WHAT IS A TARIFF?  A tariff is a special fee that is charged to the corporation that imports certain products from other countries.  Like Walmart for instance, when they order a whole bunch of Haier TV’s or that nasty frozen tilapia fish they sell; the products come into one of our 328 US ports of entry for inspection.  Upon inspection Walmart will get charged a tariff or “duty” fee for the release of the goods.  US and custom border agents collect the fees that go directly to the US Treasury.  By the way; don’t eat that Chinese tilapia, it is like poison; but that is a story for another day…moving on.

ARE TARIFF FEES CHARGED ON ALL IMPORTS?  96% of all imported products are charged a tariff fee, with the average rate at 2%.  Currently, China is the highest rate at 25%; bumping the Bahamas out of the top spot, with a current fee of 18.56%.  Coincidently, the current duty fee to China are only about ½ the size of the 59% fees that were implemented back in the 30’s during the great depression. 

WHY CHARGE TARIFF’S?  Tariffs are charged for a couple reasons.  The major reasons are to generate income for the government and to protect the US manufacturing industry.  For instance, if there were no tariff fees on BMW, a new three series would cost about the same price as a Ford Focus…and that is just not right!  This is not something that Ford wants or can financially handle.  So, basically it puts the US on a more even playing field with other countries.  In theory, it keeps US manufacturer successful, which keeps the US workforce gainfully employed.

HOW WILL THE TARIFF’S AFFECT US?  Everyone has a different view on this, because a few things can happen.  Product prices could go up-> retail and manufacturing facilities may look at temporary lay-offs to cut expenses…but on the flip side-> American made product sales could soar -> US manufacturing facilities may have to increase their workforce due to new orders?

On the energy side, China was one of our biggest exporters of propane. Since the start of these tariffs, way back in September 2018, China has completely slowed their orders and are now at a slow trickle.  This has caused inventories to rise throughout the winter and I am sure we will see some big numbers this summer as usage throughout the Midwest declines.  Typically, high inventories lead to lower pricing; unless the transportation services decide to take a bigger piece of the pie and raise their fees (supply and demand). I am not sure if these savings will ultimately make it to the consumer or not?

This may be an interesting summer.  With this current trade situation and the expiration of OPEC’s production cuts, we may see some 1st in the energy sector.  Buckle up folks, I think we are in for a fun ride!

Written by: Kim Leisner, Energy Sales Manager

2019 First Quarter Energy Update

We rang in the new year with the lowest crude oil values since August of 2017.  To our surprise, those values remain the lowest seen this quarter.  Slow and steady, just like a turtle crude oil managed to sneak in a 23% gain in values over the past three months.  Diesel and Gasoline followed crude oils pattern, just like the good soldiers that they are.  Both increasing roughly 25%, gasoline gaining a bit more than diesel.

So, why the drastic change and such volatility in the past three months? 

To figure this out we need to examine the factors that cause market movement.  So, let’s look a little closer at supply/demand and the economy.

Over the past 18 months OPEC has managed to make headlines with their continued threats of production cuts.  There has been quite a bit of skepticism regarding the actual follow through of these cuts.  In the past, greed has taken over and most of the nations that did agree to cut production have failed miserably.  Over the past 6-9 months however, OPEC and non-OPEC countries have steadily decreased their production and have managed to cut 1.2 million bpd.  This 3% total cut in oil production has managed to drive values up almost 25%.  Though the US continues to ramp up its production, these imports, or lack thereof are killing us.  Every so often, the President will take to twitter and demand that OPEC discontinue their cuts.  This is usually enough to bring crude oil values down a buck or so, but unfortunately it seems to be short lived as the market rebounds a day or two later. 

As much as President Trump tries to help with his tweets, the new jobs created as well as the overall confidence in the US economy that have become the norm under his leadership are only helping push crude oil values up.  US unemployment is at an all-time low of 3.8%.  We have watched the DOW’s steady incline over the past few years; going up over 30 points in the past three months.  The Federal Reserve has also taken advantage of the stronger economy outlook, raising interest rates several times in the past year; from 1.7% to 2.5%- 1/4% of this growth occurring within the last four months.  Globally, things are not as strong; and this may be our only saving grace.  Considered to be one of the foremost developing nation, China, was projected to have extraordinary growth throughout 2019/2020.   Well, they are a mess!  Their projected growth figures have been cut three times this year, with more to come. 

I honestly don’t know that we will see a lot of change over the next three months.  But, as the OPEC cut agreements get closer to their maturity dates, I think we may see some excitement.    

Written by Kim Leisner, Energy Sales Manager

Take Action During & After Snowstorms

This winter continues to dump snow all over Wisconsin. We as your propane provider are doing everything we can to keep your propane tanks full and safe!

As a home or business owner we also ask that you do your part to keep your propane equipment safe. To the left you can read some great actionable items to ensure your safety this winter.

Please pay close attention to the last tip about keeping clear driveways and pathways to propane tanks! This is extremely important as our delivery drives need to be able to get to your tanks.

If you’d like to view the entire “Safeguarding Your Home for Winter” document you can do so by going to propane.com

If you are unsure of any safety issues with your propane please feel free to contact our customer services reps at 866-455-7200.

Covering Your Energy Needs for 2019

To contract or not to contract, that is the question…or is the real question, when to contract or at what price to contract?  These things can lead to a lot of stress, not only for the consumer, but for the energy consultant too.  Over the years I have developed a strategy that helps answer some of these questions and alleviate the stress associated with planning out your annual energy budget. Let’s look at some of the tools that have helped me assist my customers with making educated decisions.

Recently, I spoke with a customer who has contracted for the past 15 years, though he feels contracting is usually a good option, he still remembers the time about 6 years ago when he locked in and the market tanked.  His contract ended up being higher priced than the local market. This made him feel like he “lost”. I reminded him that other years his contract price was lower than the local market, so I guess you could say that he “won” during those years.  I am not a huge fan of the “winning/losing” outlook. Customers will actually benefit more from a contract if they use it to set their budget for the year.  When contracting time comes around and someone is ready to lock in their pricing for the year, I ask them a few questions:

  • Is this a price you feel comfortable with? 
  • Will this price work with your annual budget?  If not, what price will?
  • Do you have a target we should be looking at?

Then question of when is a good time? Again, I look at historical pricing.  Below is a chart that shows the highest/lowest offered pricing for over the past 20 years.  Click here to see historical pricing. As you can see, fuel pricing tends to be at a lower level Dec-Feb.  Though, this may not always be the “winner”, it is a great tool to utilize when making buying decisions.  FYI: the best contract price offered last year was 2/14/18, but the best retail price was offered in March 2018.  So, this is not perfect, but it gives us a darn good idea of when; not to lock in futures pricing.

My suggestion is to talk to your local energy consultant and clearly explain your needs for the upcoming year.  Together, you can come up with a plan for your spring/fall 2019 fuel needs.  Again, I want to stress that locking in your fuel supply is not about winning or losing, but focusing on setting a budget for the upcoming season.  My final advice that I give to all of my customers is DON’T LOOK BACK!  What I mean by that is; after you decide to lock in your fuel price at a value that works for you and your business, don’t drive yourself crazy by watching the market and constantly second guessing yourself and the decision you made.  Please feel confident that you made a good decision and though pricing may or may not drop lower, you are going to be OK and a few extra pennies per gallon either way will not make or break your business.

By Kim Leisner, Energy Sales Manager

Cenex® Winterized Premium Diesel Fuels

 

With the cold weather settling in, it is time to start thinking about winter diesel fuel. Cenex® Winterized Premium Diesel product line offers broad coverage to meet your unique needs  – from moderate temperatures to extreme winter cold and everything in between.

Our full line up of Cenex® Winterized Premium Diesel Fuels includes:

Cenex Wintermaster® Winterized Premium Diesel is formulated with an operability of –30° F and a typical cold filter plugging point (CFPP) of –55° F. Cenex Wintermaster® is specifically formulated for the demands of diesel powered equipment in the most extreme winter conditions.

Cenex Roadmaster XL® and Ruby Fieldmaster® Seasonally Enhanced Premium Diesel Fuels are formulated for moderate climates and provide outstanding shoulder season flexibility. Cenex Seasonally Enhanced Premium Diesel Fuels deliver a typical cold filter plugging point (CFPP) of -25° F.

#1 Diesel Fuel with Cenex Premium Diesel Fuel Additive is used to blend down your Cenex® Premium Diesel Fuel tanks during transition from summer to fall/winter, helping ensure additives remain at proper levels. Ideal for blending down bulk tanks, retail fueling site tanks and customer storage tanks. Contact our energy specialist today with any questions.

Originally posted on “In the Know” CHS

2019 Cenex® Gift Card for Gallons Promotion

 

The Gift card for lubricant gallons promotion is back again this year starting on November 1, 2018. For every 125 gallons of qualifying Cenex® lubricants you purchase from CHS Larsen Co-op from November 1, 2018, through February 29, 2019, you will receive a $50.00 Visa gift card. Better yet, there is no limit to the gallons you can buy during this four month promotion period or the number of Visa gift cards you can earn. Listed below are the qualifying Cenex® lubricants that are eligible (most commonly needed products). Plus, greases are also eligible towards the 125 gallon threshold.

Qualifying Products:

Maxtron® DEO Synthetic Blend Diesel Engine oil

Maxtron® Enviro-Edge® Full Synthetic Diesel Engine Oil

Superlube TMS® Conventional Diesel Engine oil

Maxtron® GL Full Synthetic EP Gear lubricant

Maxtron® THF+ Full Synthetic Tractor Hydraulic Fluid

MP Gear Lube

Qwiklift® HTB® Hydraulic Fluid

 

Greases:

Blueguard® 500+

HD Moly Extreme

Maxtron® EP

Maxtron® FS

ML365®

Molyplex 500+

Poly Extreme®

Red Protect®

Fluid Gear Grease

For more information or to place a lubricant order please call your Energy Specialist today. CHS Larsen Co-Op thanks you for allowing us to be your Cenex® lubricants supplier.

Now is the Perfect Time to Change Lubricants in Your Equipment

 

As we enter the end of October, harvest is in full swing in many parts of Wisconsin. As field work comes to an end in the November and December it’s time to think preparing for putting equipment away for the winter. With new technologies in oil and other lubricants, we are seeing higher hour thresholds and thus longer drain intervals for such things as engine oil, transmission, and hydraulic oils/fluids. Many farmers are now experiencing just one oil change per year and topping off other lubricants as needed in season.

Many manufacturers of farm equipment and accessories are recommending that oil/lubricant changes take place when the equipment is being put away for the winter. The reason for this is twofold; first, it is important to make sure all that old and worn out lubricants are pulled out of the engines, transmissions, braking, hydraulic, and gear areas so the acids/dirt do not sit on metal parts over winter, possibly causing corrosion or other damage. Second, new oil and lubricants, with their full load of protective additive ingredients, will not only protect the metals, seals, and other parts, but add full lubrication protection over winter/extended periods of inactivity, aiding in start-up come next spring. Think of this as applying a protective layer of lubricant on all metal parts before the cold Wisconsin winter and months of inactivity occur.

Because of these manufacturer recommendations to change oil and other lubricants in the late fall/early winter, CHS and Cenex® have a bulk lubricant program in place called the Gift Cards for Gallons lubricant program. This program takes place from November 1, 2018, through February 28, 2019, for delivery of the most requested oil, lubricants, and grease needed for farm and heavy duty equipment. This program not only allows you to get engine oils and lubes when you need them after the harvest season is completed; but, also gets you ready for spring and eliminates the annual road bans on deliveries come March and April. Talk to your local CHS Larsen Certified Energy Specialist for more details on this gift card program and how you can earn a Visa $50 gift card for every 125 gallons of lubricant and grease products purchased during the promotional period. Combine high quality Cenex® lubricants and the Cenex Total Protection® Warranty program (TPP) and you are set to protect the internal parts of the machines that power your farm operation.

Written by: Todd Plath, CES

Keeping Your Engines Protected is Our Top Priority

Protecting you Equipment from Wisconsin’s extreme winter temperatures

 

As the days get shorter and the nights grow colder, it’s time to start thinking about protecting your equipment from Wisconsin’s extreme winter temperatures.

CHS Larsen Co-op has already started the process of planning for winter.  Approximately a week ago we added the WA4 additive to our Cenex® Ruby FieldMaster® and RoadMaster® fuel.  For a few extra cents per gallon the WA4 cold flow improver gives you a slightly higher operability range than our standard fuel. It’s perfect for this time of year, when temps can range anywhere from 25 to 70 degrees.

Thanksgiving and deer season will soon be upon us, and so will be the switch to Our Cenex® Ruby FieldMaster® and RoadMaster® SE (Seasonally Enhanced).  SE was formulated to provide excellent coverage for the end of fall/beginning of winter, with a cold filter plugging point (CFPP) of -25 degrees.

But, as anyone that lives in Wisconsin knows, we need more protection than the SE once winter actually hits.  When it gets cold, I mean really cold, like nose freezing shut/hurts to breath kind of cold; we need a fuel blend that will keep us going.  Everybody knows, the world doesn’t stop turning because it’s -30 degrees outside and we don’t stop either.  That is why Cenex® created WinterMaster®!

Cenex® WinterMaster® gives us operability of -30 degrees with a CFPP of -55 degrees.  With a 70/30 blend of #1 & #2, this is the final step we take to ensure that we are ready for whatever winter can throw at us.

If you are wondering what formulation is right for you and at what times you should make the switch to winter fuels, please call your Energy Sales Representative today.

Winter Master Road Master XL 

Written by: Kim Leisner, Energy Sales Manager

Wisconsin Home Energy Assistance Program

As the leaves fall and the cooler weather sets in, preparing for winter moves up on our “to do” lists.  Many of us prepare by giving our snow blowers a tune up, putting away our summer wardrobe and get the sweaters & vests out of storage, maybe installing a snow fence.

How many of us are tasked with having to prepare financially for winter?  Maybe not you, but someone you know could be struggling with having to decide whether to pay their heating bill or buy groceries.  Many of our parents & grandparents are going without crucial medication in order to pay their heating bill.

If you or someone you know is struggling to make ends meet in the winter, please know that there is help. The Wisconsin Home Energy Assistance Program or WHEAP is available and they are now taking applications for the 2018/2019 heating season.

Please follow this link for contact information and income guidelines or call 1-866-HEATWIS.  CHS Larsen Cooperatives energy department has worked with WHEAP for many years and We will be happy to assist in any way we can.

 

Do You have Enough Fuel to get Through Harvest?

Harvest time is upon us, as independent businessman in the Agricultural industry there are so many things to worry about during harvest season.

Do I have enough employees? Do I have enough equipment? Will I have any breakdowns? Will I get a good price for my corn/beans?

One worry that may sometimes not be on the forefront is fuel supply.  Do I have enough fuel on the farm to get through the next few days… or the week?  Typical rule of thumb for tank capacity on the farm is: have enough fuel to last four days during peak usage.

For instance, you use an average of 12,000 gallons of off road diesel fuel during harvest. Your average harvest lasts three weeks, you should have at least 2,000-2,500 gallons of off road diesel fuel storage on the farm.

12,000 gallons (divided by) 21 days = 571 gallons per day

571 gallons (x) 4 days = 2284 total capacity

Understandably, this is not always an easy or financially feasible task.  Though we would always like to see someone increase their total storage on the farm for many reasons, we too understand this can’t always happen.  What we do ask though, is that you communicate with us before, during and when you are finished combining, chopping, hauling manure, etc.  It is as simple as a phone call to your local energy rep. Please just give us a few days notice when you are going to start your peak usage and then let us know when you have finished. This gives our delivery drivers some time to prepare and set up a game plan to keep you full.   We will also be touching base during peak usage, just to see if any adjustments need to be made.  I really believe that with proper communication, your fuel supply should not be a worry!

*Quick note* if you are wondering about the benefits of adding fuel storage capacity on the farm, please call one of our Energy Reps and we would be happy to meet with you and go over the financial benefits involved in increasing your storage!

 

© 2019 CHS Inc.