June 23, 2025 • 19 mins
Tyler Stockton, procurement manager at Northdale Oil, shares his expertise on navigating volatile energy markets and how global events impact fuel prices for agricultural operations. With seven years in the energy industry, Tyler offers valuable insights into hedging strategies, supply chain dynamics, and current market conditions affecting farmers' bottom lines.
• Northdale Oil has grown from one truck and station in 1992 to over 30 gas stations and a fleet of delivery vehicles today
• During COVID, crude oil traded at negative prices, allowing Northdale to lock in multi-year fuel contracts for farmers at extremely low rates
• Russia's invasion of Ukraine sent prices soaring to $130 per barrel, creating wild market swings
• Hedging strategies help farmers establish predictable fuel budgets regardless of market volatility
• Most fuel in the region comes from Canadian crude refined in Mandan, ND or Minneapolis before distribution through pipeline networks
• Recent Middle East tensions between Iran and Israel are creating new price instability in energy markets
• Terminal "basis" pricing significantly impacts final fuel costs - currently showing unusual patterns with negative basis in some markets
Contact Tyler at 701-757-0668 (office) or 701-520-9056 (cell) for fuel pricing and supply questions.
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Thank you, Tommy G
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:11):
welcome to the ag bowl podcast.
Welcome to ag bowl media.
I'm sitting here live, liverecorded in nesvik, at nesvik
trading, here in nashville.
Now this youngster we're goingto bring in here there is tyler
stockton.
Tyler, I met you in Nashville.
Welcome to the Egg Bowl Podcast, my friend.
Speaker 2 (00:26):
Thanks for having me, Tommy.
Speaker 1 (00:28):
Yeah, so I'm supposed to look in the camera and
you're down there on my laptop.
I got this all messed up, buthey, this is our first show.
I think we're going to do thisonce in a while.
Real quick.
Number one, welcome, and twotell us a little about yourself.
You're new here on the Egg Bowlpodcast.
Speaker 2 (00:44):
Yeah, so I've been doing energies for seven years
now at all at Northdale.
I started at the bottom doingsome billing and doing
everything that to the customer,to dispatching, to sales, and
now I've worked my way into aprocurement manager role.
Speaker 1 (01:01):
I like that, and tell us about where you grew up in
the Great North.
Speaker 2 (01:06):
Yeah, I grew up in the big, booming metropolis of
Niche, North Dakota.
Yeah, maybe 400 people therenow and now.
I've lived in Grand Forks nowfor seven, seven and a half
years.
Speaker 1 (01:18):
Now, if I remember from a past episode, young
Marcus Hughes said there's aheck of a pizza place up in
Niche.
Is that correct?
Speaker 2 (01:24):
Just north of Niche, in Altona, manitoba, called
Pizza Haven.
Speaker 1 (01:30):
That's a long way to travel.
For a slice Might be tombstonefor this cat.
Okay, who do you work for?
What do you do?
The stage is yours.
We'll go full screen on youngTyler.
Speaker 2 (01:41):
Yeah, work for Northdale Oil.
It's been a company we've beenaround since 1967, so 58 years
family owned, run by Scott MissyReck.
Scott's dad ran the companyuntil about the 80s.
He went through some hard timesthere with the 80s, as a lot of
companies did, and he boughtthe company in 92.
One station, one truck he wasdriving going up to Winnipeg,
(02:04):
manitoba, bringing fuel backdown to Moorhead, down to the
cities all over the place, andhe's turned it into what we have
now, which is mid-30s of gasstations.
Sometimes we question ourselveshow much we have.
We run about 30 semis on theroad between propane fuel and
diesel exhaust fluid, multiplebulk trucks for fuel and propane
(02:24):
, retail propane bulk, propane,wholesale fuel.
We have our own diesel exhaustfluid plant.
That's in Drayton, north Dakota.
We actually bought Prills fromChina at one point in time to
make our first little bit of DEFand now we buy slurry and blend
that there.
So a wide variety of services.
We touch Grand Forks in roughlya 300-mile radius up into
(02:47):
Manitoba, western North Dakota,a little bit of South Dakota and
into Minnesota, and recentlywe've just started railing some
diesel fuel into various statesin the US.
Speaker 1 (02:58):
That's awesome.
I popped something up here.
I'm going to let me see ifthat's on the stage.
I popped up your website See ifyou can see that Should be
there.
It is.
There you go.
This will kind of rehash whatyou just said on the physical
delivering of fuel the gasstations, the whole deal.
Speaker 2 (03:21):
That looks right, that's us.
Speaker 1 (03:25):
So you wear a lot of blue logos and everything else,
right?
Speaker 2 (03:28):
Yes, yes, we do.
Speaker 1 (03:30):
That's awesome.
Okay, here's what I wanted totalk about.
One and and you know if you'rea farmer or you're a rancher or
anyone else uh, uh, you're using, uh, you're using, this fuel,
so it is impossible to farmwithout energy.
And then farmers are growingcorn and soybeans, and that
soybean oil is becoming anenergy, and that corn as we know
(03:54):
, one third of the crop of corngets turned into energy.
Talk about what you do on aday-to-day basis, and this is an
introductory video of you andme getting together, but as we
start to meet more, hopefully wedo this once a month.
We are in by far one of themost dynamic energy markets
we've been in in quite a while,correct?
Speaker 2 (04:14):
Yeah, since COVID.
Yeah, last four or five years.
Speaker 1 (04:17):
Well, let's go back.
So five years ago we had COVID.
That was wild.
We traded negative crude Thanksfor bringing that up.
And then we did Russia invadedUkraine and we traded $130 crude
.
So for our viewers andlisteners we've traded negative
39, full disclosure, that was onthe deliverable, okay.
(04:38):
But even the second and thirdmonth went down to $10, $11.
Like real crude oil went to $10because the earth was taking
what?
Four or six weeks off to fixthe unfixable right.
Speaker 2 (04:50):
Yeah, we hit the pause button on everything and
no one knew what to do for awhile.
Speaker 1 (04:53):
That's a great way of putting it.
We did hit the pause button Oneof the strangest times of our
lives.
Then we get out of pause, fromgoing to really low prices, from
shutting down to uh, just anepicenter of a place that uh,
just the middle of the world,russia invade ukraine.
Then we take it all the wayopposite, from negative or ten
dollars up to 130.
(05:14):
Have you been involved in thefuel business through all that?
Speaker 2 (05:17):
yeah, I was in a couple years before covid and so
we saw those, those lows, thoseweird times.
I mean we were buying propaneat one point in time from out
west for a nickel a gallon,something like that they were
just giving it away, Giving itaway literally.
Yeah, almost it felt like it.
It felt like we were almostrobbing the place, but I mean,
everything was low.
(05:38):
We had farmers contracted outfor three years at you know a
little over $1 to $1.50,something like that.
So it was fun to see that kindof hang around.
And as that Russia-Ukrainestuff kind of took off, we had
some lingering contracts fromthat still in there.
So as crude and diesel pricesstarted to rise up, we had a few
(06:02):
farmers that were still paying$1.50 to maybe $2 for fuel as
prices went up into $3.
Speaker 1 (06:05):
That's amazing when I think of hedging, when we talk
about what I do or what you helppeople do in the futures and
options market back in the day.
Part of the reason SouthwestAirlines was so successful was
when crude oil prices wererising.
During the 08 to 10, 11inflation, we had a commodity
boom.
You're too young.
But in 08, 9, and 10, we had aface-ripper of a commodity
(06:28):
market and Southwest was veryhedged okay.
And then other airlines said,oh my God, we've got to model
ourselves off of Southwest.
So they started getting hedgedat higher prices and then crude
oil fell apart.
So it can go both ways right.
You could be explain that alittle bit.
Speaker 2 (06:46):
Yeah, it can go both ways.
And I mean as our strategy as acompany.
It's not really necessarilytrying to hedge the market to
make a profit one way or another.
It's more of a tool that we useto present to whether it be
farmers, construction companies,any kind of commercial company,
any sort of end user or otherwholesale companies as a way to,
you know, set a budget and kindof you know, we see these
(07:10):
things coming up in the market,we can see there's turnarounds
coming in in refineries laterthis year.
Hey, why don't we lock somefuel in, as we see basis should
kind of rise at that point intime, expect some higher prices,
especially if it's duringharvest time, and lock something
low and kind of fix your budgetso you know what you're paying
for the next year or two yearsor three years, if it makes
(07:30):
sense to do that.
Speaker 1 (07:32):
And you guys use like a structured product, like a
particular FCM, will makemarkets and help you hedge that
risk right.
You won't click the button anddo the futures and options, but
you call a group and they dothat for you, correct?
Speaker 2 (07:45):
Correct.
Yeah, we go through a thirdparty to do it.
We have all the data in frontof us and then, as soon as we
finish our phone call, we'llmake our next phone call, send
out the email and lockeverything in right there all
righty, you're teaching mealready now.
Speaker 1 (07:58):
Last time you and I talked about this, we were up in
broadway having a couple, uh,white claws or two and, uh, you
know, it was all a little blurryin the morning but that was fun
, I believe we went to the stageand I don't remember if the
music was good, but the companywas good and the boss was kind
enough to buy us, uh, quite afew white claws, right, right.
I kept telling them there formy wife, but I was drinking them
With that.
(08:20):
Tell us what like last week waslike.
You wake up and you look atyour phone and crude oil is up
$9 a barrel.
What's life like for you?
Speaker 2 (08:30):
Yeah, you know it started even before we woke up,
before we even went to bed.
We've got a group text betweena few of us here in the office
and we're sitting there.
I can't believe it was a grouptext between a few of us here in
the office and we're sittingthere.
I can't believe it was Thursdaynight.
So a couple of us got doneplaying softball on Thursday
night and next thing you know wehave a, we have a text sense.
We'll look at these fuelmarkets and you look at looking
at the heating oil futures.
(08:50):
They're up.
They were up over 10 cents atthat point in time.
So we knew we were in for a dayin the morning.
And you come in and look and youknow it's up 14, 15 cents and
you try to figure out what'sgoing on.
And the first thing you see iseverything going on with Iran
and Israel.
And then you see the videos ofthe missiles coming down and you
realize how real everything is.
And you know you try to be asproactive.
(09:12):
But when it happens overnight,guys are calling what's going on
?
You tell them but at that pointit's too late.
But you can protect againstanything going forward because
it seems like this could drag onfor a bit.
Protect what you can and holdon to your something.
Speaker 1 (09:31):
I'm going to do lightning round here before we
finish for today.
But if I'm sitting in my officein Mayville, north Dakota, and
I'm a farmer and I buy a tankerload of fuel that could be red
diesel or it could be road grade, right, yep, what's that called
?
Number one, number two Clearand dyed.
Speaker 2 (09:47):
Yeah, on road for the clear and off road for the dyed
Yep.
Speaker 1 (09:50):
Okay, I'm going to ask you a question.
If you don't know it just sayyou don't know.
But I got a feeling you know.
Where did that oil come from?
Which oil the?
Oil that made that final fuelif I'm in north dakota, yep, oil
gets taken from the ground andthen it gets refined.
Start from the ground to therefinery, to northdale yeah.
Speaker 2 (10:11):
So most of the most of the oil up in in this area I
shouldn't say most, but a good,a good chunk.
I think it depends on,obviously, how they buy, but a
good chunk of it does come upfrom, uh, from canada.
So when we those tariffs were athing, you know, the crude and
the, the tariffs, the tradingbecame a big conversation,
especially up here.
We do a lot of cross-borderwork, so that would have
affected a lot of things that wedo as a company.
(10:33):
Um, and then it comes down here,gets refined in mandan, north
dakota refinery or down in thecities there's a couple of
refineries down there and itgets spread between the New Star
pipeline and the Magellanpipeline, new Star being fed by
Mandan and the Magellan beingfed by the pipelines in the
cities, the refineries in thecities.
So then their product getsrefined in those refineries,
(10:56):
gets sent down the line and ofcourse you have increased costs
as it comes down the line andeventually it gets up to us
either in Grand Forks is the endof the line, so we get some
decent prices here, with beingthe end of the line, they kind
of send it here to discount itbut stops in Fargo, moorhead,
jamestown, alexandria, saukCenter, throughout the area all
have their own terminals that wecan pull out of.
Speaker 1 (11:18):
And if, if I said the word the rack, it's not a place
you buy clothing or laundry oranything.
Speaker 2 (11:26):
What is the rack?
The rack is the loading part ofthe terminal itself.
So you drive by and you see allthe big white tanks sitting
there.
I mean those whole variousproducts, your different grades
of gasoline, your differentgrades of diesel fuels, some
additives in there, possiblysome jet fuels or some aviation
fuels, but those are all fed towhat they call as the rack.
So you see the semis pull inand I know here in Grand Forks
(11:48):
there's three arms in this rackand the semi will pull up.
They go through their computerselections of whatever hook up
the hoses in there, openeverything, and that rack is
where the loading actuallyhappens into the semi Okay, and
then we put it in one of thesebeautiful Northdale tankers.
Speaker 1 (12:07):
Amazing how that got up there.
It's like someone clicked abutton.
Have you spent much time atthese refineries?
Like, do you guys go on tours?
Speaker 2 (12:17):
We haven't yet.
I know Scott probably has.
I've spent a little bit of timeat the rack here in town, the
terminal here.
We have a pretty goodrelationship with the Did have
one.
He just switched in and got anew job but we had a good
relationship with the guys upthere.
They do a lot of work for uswhen we need some things and
they Okay.
Speaker 1 (12:35):
If I say the word tariffs, how does that affect
your business?
Speaker 2 (12:45):
Being us.
I think it affects us more thanmost.
We do bring down a good chunk,and a good chunk in 99, 90, 95%
of our diesel fuel does comefrom Canada.
So when those were first aconversation, I mean our life
kind of went on hold.
As far as you know, we'recalling our supplier, we're
calling our, our customs brokers, we're calling the border.
What is this affecting?
What is it not affecting?
What are these tariffs going toend up being?
Is there anything we can do tolessen this, prevent this?
(13:09):
Just a lot of phone calls and alot of unknown.
That just kind of had a had tounfold over a day or two or
three is our first calls to the,our custom brokers and the
border.
They're like we don't even knowwhat this is affecting, what
the amounts are going to be.
It just got announced theyhaven't been, they hadn't been
fed information yet.
So we kind of had our ownlittle pause for a few days,
(13:30):
cause if we would have pulledproducts from Canada and we
would have got the tariffs, Imean we're paying a quarter or
more a gallon than we shouldhave been.
So we just kind of paused, putoff everything you can and
function as minimalistic aspossible for a few days.
Speaker 1 (13:46):
So you've been through a lot.
You're a young man.
How long have you been involvedin this business?
Speaker 2 (13:50):
Going on seven years, at least seven years, in.
Speaker 1 (13:51):
August, so you're very qualified to talk about
this.
You survived COVID, yousurvived the Ukraine war.
We now have an Israel-Iran war.
Today is June 19th and uponrecording this episode, crude
oil closed at 12 o'clock noon up$2.
And the Dow Jones was down 400.
They'll open again at fivecentral and the markets are
(14:12):
extremely volatile.
Crude oil is approaching 80.
The Trump administration hadpromised lower fuel prices.
Drill, baby drill.
Where is all this?
Drill baby drill.
Speaker 2 (14:22):
I don't know where it's at.
We've been waiting for it for awhile.
I think part of it too.
You look across everywhere.
We're at the moment not able toeven pull some stuff from
Canada.
They're two of their biggestrefineries, at least from the
guys we pull from there.
They had some issues.
(14:42):
They've been down for a monthand they're not exporting
anything to the US.
So I think these refineriesdown here have a lot of excess
product and you can see that inthe basis in the area.
I know there's a lot of placesthat have a negative basis or a
very low basis.
I'm talking 10, 15 cents belowwhere they normally are this
time of year.
So even though we see all theseprices keep rising, that basis
is staying low.
So relatively good buy intheory, as compared to where it
(15:06):
could be should there be ashortage of product, which is a
good thing.
They don't have a shortage ofproduct, but there's a lot of
room for that basis to come upto where it normally is.
And yeah, they, they shouldstart drilling up.
There's some action kind ofhappening out west, so we've
heard from from some guys outthere but uh williston, etc yeah
(15:27):
, yeah, western north dakota,out in the, the basin there, and
we're waiting for it to pick up, but we haven't heard too much
on it yeah, real quick before wewrap up.
Speaker 1 (15:36):
Uh, I'd like to do this once a month with you, if
that's okay and for peoplelistening.
Some people will be watchingthis on YouTube.
If you're listening, you'reprobably on Apple or Spotify or
another device.
Of course, we're going to askpeople to click, like and
subscribe.
We'd love you to click on allour social medias Facebook,
Instagram.
Whatever you can get ahold ofthe good folks over at Northdale
(15:57):
Oil, whatever you can get ahold of the good folks over at
Northdale Oil, but the basis.
I know what that means.
Like if I'm in Mayville, NorthDakota, and corn at the Board of
Trade is trading $4.50 and theyhave a minus 50 cent basis
where you get $4 for your corn.
Basis in what you're talkingabout.
You say that word so loosely asif everyone understands it.
Explain in your world anegative basis and a positive
(16:19):
basis.
Speaker 2 (16:19):
Yeah.
So what that basis tradesagainst is heating oil futures,
and heating oil will be thebenchmark in a lot of places.
Right now the average istypically somewhere between 15
to 18, maybe 20 cents positive.
So we'll take round numbers Ifheating oil was $2.50, then our
price at the rack if it was a 15cent positive basis, will be
(16:42):
$2.65.
And right now we're seeing insome places as little as a
negative 5 cent basis.
So take that same $2.50 heatingoil you're looking at $2.45
from the rack for us to pick itup.
Speaker 1 (16:56):
And then the difference is what you charge on
top of that, and that's yourmargin, and that's how you guys
make money correct?
Speaker 2 (17:02):
Yeah, a little bit of margin cover our freight costs
to get it there and put it inyour tank.
Speaker 1 (17:06):
That's about it, I mean it'd be no different than
the Milkman A little biggertruck.
Speaker 2 (17:11):
Well no, they make milk trucks just as big, but a
little bit different delivery,but same process.
Speaker 1 (17:17):
Right, I like it All right.
Today we had Tyler Stockton onfrom Northdale.
We threw this together.
We said let's do something.
You've been wanting to do thisfor a while and I wanted to do
it in studio with you inMayville.
But the software works prettygood and we got someone clicking
the buttons doing a great job.
But next time we come on, howdo people get a hold?
Speaker 2 (17:37):
of you.
They can get a hold of you.
They can get a hold of us atthe office.
Call the Northdale office701-757-0668.
Or you can call my cell phoneI'll put that out there, I
suppose 701-520-9056.
Speaker 1 (17:51):
You're going to get all types of creepers calling
you and texting you now.
I'm going to text you at 1 inthe morning.
What was I going to tell you?
Next time?
We'll have that ready for youon a pop-up and bring some
subjects.
We want to keep educatingpeople.
A lot of people can talk aboutcorn futures, bean futures, but
you cannot run a farm withoutenergy and you are in the energy
business.
So with that I want to thankyou as a first-timer.
(18:13):
You did well.
Speaker 2 (18:21):
And you think we can drag Marcus on possibly, and
maybe even the boss man, right,I think we could drag them both
on.
You know, marcus's dad is abanker so he's got banker hours
today on a golf tournament andScott's out playing in
Charleston, south Carolina, atthe moment but he's visiting his
son in the Marines so I won'tgive him too hard of a time, but
we'll get them both on herewell, we thank his son for
serving.
Speaker 1 (18:34):
Okay, thank you, my friend.
Thank you, tommy allisafi.
Agbo Media Agbo Podcast comingto you, recorded here from the
Nesvik Trading Studios here inNashville, tennessee.
Young Tyler Stockton.
I met him in Nashville.
He's a fine young man and withthat we will close the show, we
hit, end recording and we'll seeyou all next time.
Thank you.
welcome to the ag bowl podcast.
Welcome to ag bowl media.
I'm sitting here live, liverecorded in nesvik, at nesvik
trading, here in nashville.
Now this youngster we're goingto bring in here there is tyler
stockton.
Tyler, I met you in Nashville.
Welcome to the Egg Bowl Podcast, my friend.
Speaker 2 (00:26):
Thanks for having me, Tommy.
Speaker 1 (00:28):
Yeah, so I'm supposed to look in the camera and
you're down there on my laptop.
I got this all messed up, buthey, this is our first show.
I think we're going to do thisonce in a while.
Real quick.
Number one, welcome, and twotell us a little about yourself.
You're new here on the Egg Bowlpodcast.
Speaker 2 (00:44):
Yeah, so I've been doing energies for seven years
now at all at Northdale.
I started at the bottom doingsome billing and doing
everything that to the customer,to dispatching, to sales, and
now I've worked my way into aprocurement manager role.
Speaker 1 (01:01):
I like that, and tell us about where you grew up in
the Great North.
Speaker 2 (01:06):
Yeah, I grew up in the big, booming metropolis of
Niche, North Dakota.
Yeah, maybe 400 people therenow and now.
I've lived in Grand Forks nowfor seven, seven and a half
years.
Speaker 1 (01:18):
Now, if I remember from a past episode, young
Marcus Hughes said there's aheck of a pizza place up in
Niche.
Is that correct?
Speaker 2 (01:24):
Just north of Niche, in Altona, manitoba, called
Pizza Haven.
Speaker 1 (01:30):
That's a long way to travel.
For a slice Might be tombstonefor this cat.
Okay, who do you work for?
What do you do?
The stage is yours.
We'll go full screen on youngTyler.
Speaker 2 (01:41):
Yeah, work for Northdale Oil.
It's been a company we've beenaround since 1967, so 58 years
family owned, run by Scott MissyReck.
Scott's dad ran the companyuntil about the 80s.
He went through some hard timesthere with the 80s, as a lot of
companies did, and he boughtthe company in 92.
One station, one truck he wasdriving going up to Winnipeg,
(02:04):
manitoba, bringing fuel backdown to Moorhead, down to the
cities all over the place, andhe's turned it into what we have
now, which is mid-30s of gasstations.
Sometimes we question ourselveshow much we have.
We run about 30 semis on theroad between propane fuel and
diesel exhaust fluid, multiplebulk trucks for fuel and propane
(02:24):
, retail propane bulk, propane,wholesale fuel.
We have our own diesel exhaustfluid plant.
That's in Drayton, north Dakota.
We actually bought Prills fromChina at one point in time to
make our first little bit of DEFand now we buy slurry and blend
that there.
So a wide variety of services.
We touch Grand Forks in roughlya 300-mile radius up into
(02:47):
Manitoba, western North Dakota,a little bit of South Dakota and
into Minnesota, and recentlywe've just started railing some
diesel fuel into various statesin the US.
Speaker 1 (02:58):
That's awesome.
I popped something up here.
I'm going to let me see ifthat's on the stage.
I popped up your website See ifyou can see that Should be
there.
It is.
There you go.
This will kind of rehash whatyou just said on the physical
delivering of fuel the gasstations, the whole deal.
Speaker 2 (03:21):
That looks right, that's us.
Speaker 1 (03:25):
So you wear a lot of blue logos and everything else,
right?
Speaker 2 (03:28):
Yes, yes, we do.
Speaker 1 (03:30):
That's awesome.
Okay, here's what I wanted totalk about.
One and and you know if you'rea farmer or you're a rancher or
anyone else uh, uh, you're using, uh, you're using, this fuel,
so it is impossible to farmwithout energy.
And then farmers are growingcorn and soybeans, and that
soybean oil is becoming anenergy, and that corn as we know
(03:54):
, one third of the crop of corngets turned into energy.
Talk about what you do on aday-to-day basis, and this is an
introductory video of you andme getting together, but as we
start to meet more, hopefully wedo this once a month.
We are in by far one of themost dynamic energy markets
we've been in in quite a while,correct?
Speaker 2 (04:14):
Yeah, since COVID.
Yeah, last four or five years.
Speaker 1 (04:17):
Well, let's go back.
So five years ago we had COVID.
That was wild.
We traded negative crude Thanksfor bringing that up.
And then we did Russia invadedUkraine and we traded $130 crude
.
So for our viewers andlisteners we've traded negative
39, full disclosure, that was onthe deliverable, okay.
(04:38):
But even the second and thirdmonth went down to $10, $11.
Like real crude oil went to $10because the earth was taking
what?
Four or six weeks off to fixthe unfixable right.
Speaker 2 (04:50):
Yeah, we hit the pause button on everything and
no one knew what to do for awhile.
Speaker 1 (04:53):
That's a great way of putting it.
We did hit the pause button Oneof the strangest times of our
lives.
Then we get out of pause, fromgoing to really low prices, from
shutting down to uh, just anepicenter of a place that uh,
just the middle of the world,russia invade ukraine.
Then we take it all the wayopposite, from negative or ten
dollars up to 130.
(05:14):
Have you been involved in thefuel business through all that?
Speaker 2 (05:17):
yeah, I was in a couple years before covid and so
we saw those, those lows, thoseweird times.
I mean we were buying propaneat one point in time from out
west for a nickel a gallon,something like that they were
just giving it away, Giving itaway literally.
Yeah, almost it felt like it.
It felt like we were almostrobbing the place, but I mean,
everything was low.
(05:38):
We had farmers contracted outfor three years at you know a
little over $1 to $1.50,something like that.
So it was fun to see that kindof hang around.
And as that Russia-Ukrainestuff kind of took off, we had
some lingering contracts fromthat still in there.
So as crude and diesel pricesstarted to rise up, we had a few
(06:02):
farmers that were still paying$1.50 to maybe $2 for fuel as
prices went up into $3.
Speaker 1 (06:05):
That's amazing when I think of hedging, when we talk
about what I do or what you helppeople do in the futures and
options market back in the day.
Part of the reason SouthwestAirlines was so successful was
when crude oil prices wererising.
During the 08 to 10, 11inflation, we had a commodity
boom.
You're too young.
But in 08, 9, and 10, we had aface-ripper of a commodity
(06:28):
market and Southwest was veryhedged okay.
And then other airlines said,oh my God, we've got to model
ourselves off of Southwest.
So they started getting hedgedat higher prices and then crude
oil fell apart.
So it can go both ways right.
You could be explain that alittle bit.
Speaker 2 (06:46):
Yeah, it can go both ways.
And I mean as our strategy as acompany.
It's not really necessarilytrying to hedge the market to
make a profit one way or another.
It's more of a tool that we useto present to whether it be
farmers, construction companies,any kind of commercial company,
any sort of end user or otherwholesale companies as a way to,
you know, set a budget and kindof you know, we see these
(07:10):
things coming up in the market,we can see there's turnarounds
coming in in refineries laterthis year.
Hey, why don't we lock somefuel in, as we see basis should
kind of rise at that point intime, expect some higher prices,
especially if it's duringharvest time, and lock something
low and kind of fix your budgetso you know what you're paying
for the next year or two yearsor three years, if it makes
(07:30):
sense to do that.
Speaker 1 (07:32):
And you guys use like a structured product, like a
particular FCM, will makemarkets and help you hedge that
risk right.
You won't click the button anddo the futures and options, but
you call a group and they dothat for you, correct?
Speaker 2 (07:45):
Correct.
Yeah, we go through a thirdparty to do it.
We have all the data in frontof us and then, as soon as we
finish our phone call, we'llmake our next phone call, send
out the email and lockeverything in right there all
righty, you're teaching mealready now.
Speaker 1 (07:58):
Last time you and I talked about this, we were up in
broadway having a couple, uh,white claws or two and, uh, you
know, it was all a little blurryin the morning but that was fun
, I believe we went to the stageand I don't remember if the
music was good, but the companywas good and the boss was kind
enough to buy us, uh, quite afew white claws, right, right.
I kept telling them there formy wife, but I was drinking them
With that.
(08:20):
Tell us what like last week waslike.
You wake up and you look atyour phone and crude oil is up
$9 a barrel.
What's life like for you?
Speaker 2 (08:30):
Yeah, you know it started even before we woke up,
before we even went to bed.
We've got a group text betweena few of us here in the office
and we're sitting there.
I can't believe it was a grouptext between a few of us here in
the office and we're sittingthere.
I can't believe it was Thursdaynight.
So a couple of us got doneplaying softball on Thursday
night and next thing you know wehave a, we have a text sense.
We'll look at these fuelmarkets and you look at looking
at the heating oil futures.
(08:50):
They're up.
They were up over 10 cents atthat point in time.
So we knew we were in for a dayin the morning.
And you come in and look and youknow it's up 14, 15 cents and
you try to figure out what'sgoing on.
And the first thing you see iseverything going on with Iran
and Israel.
And then you see the videos ofthe missiles coming down and you
realize how real everything is.
And you know you try to be asproactive.
(09:12):
But when it happens overnight,guys are calling what's going on
?
You tell them but at that pointit's too late.
But you can protect againstanything going forward because
it seems like this could drag onfor a bit.
Protect what you can and holdon to your something.
Speaker 1 (09:31):
I'm going to do lightning round here before we
finish for today.
But if I'm sitting in my officein Mayville, north Dakota, and
I'm a farmer and I buy a tankerload of fuel that could be red
diesel or it could be road grade, right, yep, what's that called
?
Number one, number two Clearand dyed.
Speaker 2 (09:47):
Yeah, on road for the clear and off road for the dyed
Yep.
Speaker 1 (09:50):
Okay, I'm going to ask you a question.
If you don't know it just sayyou don't know.
But I got a feeling you know.
Where did that oil come from?
Which oil the?
Oil that made that final fuelif I'm in north dakota, yep, oil
gets taken from the ground andthen it gets refined.
Start from the ground to therefinery, to northdale yeah.
Speaker 2 (10:11):
So most of the most of the oil up in in this area I
shouldn't say most, but a good,a good chunk.
I think it depends on,obviously, how they buy, but a
good chunk of it does come upfrom, uh, from canada.
So when we those tariffs were athing, you know, the crude and
the, the tariffs, the tradingbecame a big conversation,
especially up here.
We do a lot of cross-borderwork, so that would have
affected a lot of things that wedo as a company.
(10:33):
Um, and then it comes down here,gets refined in mandan, north
dakota refinery or down in thecities there's a couple of
refineries down there and itgets spread between the New Star
pipeline and the Magellanpipeline, new Star being fed by
Mandan and the Magellan beingfed by the pipelines in the
cities, the refineries in thecities.
So then their product getsrefined in those refineries,
(10:56):
gets sent down the line and ofcourse you have increased costs
as it comes down the line andeventually it gets up to us
either in Grand Forks is the endof the line, so we get some
decent prices here, with beingthe end of the line, they kind
of send it here to discount itbut stops in Fargo, moorhead,
jamestown, alexandria, saukCenter, throughout the area all
have their own terminals that wecan pull out of.
Speaker 1 (11:18):
And if, if I said the word the rack, it's not a place
you buy clothing or laundry oranything.
Speaker 2 (11:26):
What is the rack?
The rack is the loading part ofthe terminal itself.
So you drive by and you see allthe big white tanks sitting
there.
I mean those whole variousproducts, your different grades
of gasoline, your differentgrades of diesel fuels, some
additives in there, possiblysome jet fuels or some aviation
fuels, but those are all fed towhat they call as the rack.
So you see the semis pull inand I know here in Grand Forks
(11:48):
there's three arms in this rackand the semi will pull up.
They go through their computerselections of whatever hook up
the hoses in there, openeverything, and that rack is
where the loading actuallyhappens into the semi Okay, and
then we put it in one of thesebeautiful Northdale tankers.
Speaker 1 (12:07):
Amazing how that got up there.
It's like someone clicked abutton.
Have you spent much time atthese refineries?
Like, do you guys go on tours?
Speaker 2 (12:17):
We haven't yet.
I know Scott probably has.
I've spent a little bit of timeat the rack here in town, the
terminal here.
We have a pretty goodrelationship with the Did have
one.
He just switched in and got anew job but we had a good
relationship with the guys upthere.
They do a lot of work for uswhen we need some things and
they Okay.
Speaker 1 (12:35):
If I say the word tariffs, how does that affect
your business?
Speaker 2 (12:45):
Being us.
I think it affects us more thanmost.
We do bring down a good chunk,and a good chunk in 99, 90, 95%
of our diesel fuel does comefrom Canada.
So when those were first aconversation, I mean our life
kind of went on hold.
As far as you know, we'recalling our supplier, we're
calling our, our customs brokers, we're calling the border.
What is this affecting?
What is it not affecting?
What are these tariffs going toend up being?
Is there anything we can do tolessen this, prevent this?
(13:09):
Just a lot of phone calls and alot of unknown.
That just kind of had a had tounfold over a day or two or
three is our first calls to the,our custom brokers and the
border.
They're like we don't even knowwhat this is affecting, what
the amounts are going to be.
It just got announced theyhaven't been, they hadn't been
fed information yet.
So we kind of had our ownlittle pause for a few days,
(13:30):
cause if we would have pulledproducts from Canada and we
would have got the tariffs, Imean we're paying a quarter or
more a gallon than we shouldhave been.
So we just kind of paused, putoff everything you can and
function as minimalistic aspossible for a few days.
Speaker 1 (13:46):
So you've been through a lot.
You're a young man.
How long have you been involvedin this business?
Speaker 2 (13:50):
Going on seven years, at least seven years, in.
Speaker 1 (13:51):
August, so you're very qualified to talk about
this.
You survived COVID, yousurvived the Ukraine war.
We now have an Israel-Iran war.
Today is June 19th and uponrecording this episode, crude
oil closed at 12 o'clock noon up$2.
And the Dow Jones was down 400.
They'll open again at fivecentral and the markets are
(14:12):
extremely volatile.
Crude oil is approaching 80.
The Trump administration hadpromised lower fuel prices.
Drill, baby drill.
Where is all this?
Drill baby drill.
Speaker 2 (14:22):
I don't know where it's at.
We've been waiting for it for awhile.
I think part of it too.
You look across everywhere.
We're at the moment not able toeven pull some stuff from
Canada.
They're two of their biggestrefineries, at least from the
guys we pull from there.
They had some issues.
(14:42):
They've been down for a monthand they're not exporting
anything to the US.
So I think these refineriesdown here have a lot of excess
product and you can see that inthe basis in the area.
I know there's a lot of placesthat have a negative basis or a
very low basis.
I'm talking 10, 15 cents belowwhere they normally are this
time of year.
So even though we see all theseprices keep rising, that basis
is staying low.
So relatively good buy intheory, as compared to where it
(15:06):
could be should there be ashortage of product, which is a
good thing.
They don't have a shortage ofproduct, but there's a lot of
room for that basis to come upto where it normally is.
And yeah, they, they shouldstart drilling up.
There's some action kind ofhappening out west, so we've
heard from from some guys outthere but uh williston, etc yeah
(15:27):
, yeah, western north dakota,out in the, the basin there, and
we're waiting for it to pick up, but we haven't heard too much
on it yeah, real quick before wewrap up.
Speaker 1 (15:36):
Uh, I'd like to do this once a month with you, if
that's okay and for peoplelistening.
Some people will be watchingthis on YouTube.
If you're listening, you'reprobably on Apple or Spotify or
another device.
Of course, we're going to askpeople to click, like and
subscribe.
We'd love you to click on allour social medias Facebook,
Instagram.
Whatever you can get ahold ofthe good folks over at Northdale
(15:57):
Oil, whatever you can get ahold of the good folks over at
Northdale Oil, but the basis.
I know what that means.
Like if I'm in Mayville, NorthDakota, and corn at the Board of
Trade is trading $4.50 and theyhave a minus 50 cent basis
where you get $4 for your corn.
Basis in what you're talkingabout.
You say that word so loosely asif everyone understands it.
Explain in your world anegative basis and a positive
(16:19):
basis.
Speaker 2 (16:19):
Yeah.
So what that basis tradesagainst is heating oil futures,
and heating oil will be thebenchmark in a lot of places.
Right now the average istypically somewhere between 15
to 18, maybe 20 cents positive.
So we'll take round numbers Ifheating oil was $2.50, then our
price at the rack if it was a 15cent positive basis, will be
(16:42):
$2.65.
And right now we're seeing insome places as little as a
negative 5 cent basis.
So take that same $2.50 heatingoil you're looking at $2.45
from the rack for us to pick itup.
Speaker 1 (16:56):
And then the difference is what you charge on
top of that, and that's yourmargin, and that's how you guys
make money correct?
Speaker 2 (17:02):
Yeah, a little bit of margin cover our freight costs
to get it there and put it inyour tank.
Speaker 1 (17:06):
That's about it, I mean it'd be no different than
the Milkman A little biggertruck.
Speaker 2 (17:11):
Well no, they make milk trucks just as big, but a
little bit different delivery,but same process.
Speaker 1 (17:17):
Right, I like it All right.
Today we had Tyler Stockton onfrom Northdale.
We threw this together.
We said let's do something.
You've been wanting to do thisfor a while and I wanted to do
it in studio with you inMayville.
But the software works prettygood and we got someone clicking
the buttons doing a great job.
But next time we come on, howdo people get a hold?
Speaker 2 (17:37):
of you.
They can get a hold of you.
They can get a hold of us atthe office.
Call the Northdale office701-757-0668.
Or you can call my cell phoneI'll put that out there, I
suppose 701-520-9056.
Speaker 1 (17:51):
You're going to get all types of creepers calling
you and texting you now.
I'm going to text you at 1 inthe morning.
What was I going to tell you?
Next time?
We'll have that ready for youon a pop-up and bring some
subjects.
We want to keep educatingpeople.
A lot of people can talk aboutcorn futures, bean futures, but
you cannot run a farm withoutenergy and you are in the energy
business.
So with that I want to thankyou as a first-timer.
(18:13):
You did well.
Speaker 2 (18:21):
And you think we can drag Marcus on possibly, and
maybe even the boss man, right,I think we could drag them both
on.
You know, marcus's dad is abanker so he's got banker hours
today on a golf tournament andScott's out playing in
Charleston, south Carolina, atthe moment but he's visiting his
son in the Marines so I won'tgive him too hard of a time, but
we'll get them both on herewell, we thank his son for
serving.
Speaker 1 (18:34):
Okay, thank you, my friend.
Thank you, tommy allisafi.
Agbo Media Agbo Podcast comingto you, recorded here from the
Nesvik Trading Studios here inNashville, tennessee.
Young Tyler Stockton.
I met him in Nashville.
He's a fine young man and withthat we will close the show, we
hit, end recording and we'll seeyou all next time.
Thank you.
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