Every jobber faces the same sourcing question: lock in supply with a contract, or buy on the open market as you go? Spot and contract buying are the two answers, and they trade flexibility against certainty. Most jobbers use some of each. This is how they differ and how to think about the mix.
Spot buying: flexibility
Spot buying means purchasing fuel on the open market at the current price, deal by deal, with no ongoing commitment. The appeal is freedom: you pay the going rate, owe no minimums, and can pounce on a soft market. The cost is exposure. There is no guaranteed supply, and you ride the market fully, which can hurt when prices spike or fuel gets tight.
Contract buying: certainty
Contract buying means committing in advance to buy from a supplier under set terms over a period, the subject of fuel supply contracts. You gain assured supply and a known pricing formula, typically a published index like the OPIS rack average at your terminal plus a fixed differential of a few cents per gallon. That formula is worth a lot in a tight market. The trade-off is the commitment, usually a minimum volume and a term.
The real answer is usually both
Most jobbers blend the two. A common approach covers the base load with contract supply for security and buys incrementally on the spot market to capture opportunities or meet extra demand. That mix balances cost against the certainty of keeping customers supplied, and it gives you room to react when allocation tightens.
Why it depends on good cost data
Whichever way you lean, the deciding factor is knowing your true cost. Contract loads price on the formula and spot loads price at whatever that day's deal was. You can only judge which served you better if you track cost accurately per load. Running both makes that tracking matter even more, because your margin depends on getting every load's actual cost right.
What FastDragon does here
FastDragon Fuel Jobber captures the right cost for every load whether it came from a contract formula or a spot deal, and carries it into margin and tax, so a mixed sourcing strategy stays clear in your numbers.
Questions people ask
Does spot fuel always cost less than contract fuel?
No. In a soft market spot deals routinely beat contract formulas, and in a tight market the relationship flips: spot premiums blow out while the formula holds. Over a full price cycle the gap narrows, and what the contract really buys is supply you can count on.
What is ratable lifting?
Many supply contracts require you to lift your volume ratably, meaning spread evenly through the month rather than loaded all at once when the price dips. Missing the ratable schedule can bring penalties or cuts to your allocation, so the commitment is about timing as well as volume.
How long do fuel supply contracts run?
Unbranded deals often renew a year at a time. Branded supply agreements run much longer, frequently spanning many years, because they bundle in brand imaging, card processing, and incentive money that take time to pay back.
What happens to spot buyers when fuel gets tight?
Committed customers get served first. When a terminal runs short, suppliers direct product to their contract holders, and spot gallons either vanish or carry a premium. A few weeks like that push many pure spot buyers to put part of their volume under contract.