This edition first published 2016
© 2016 S. Mohamed Dafir and Vishnu N. Gajjala
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ISBN 978-1-119-02672-3 (hardback)
ISBN 978-1-119-02675-4 (ebk)
ISBN 978-1-119-02673-0 (ebk)
ISBN 978-1-119-02674-7 (obk)
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To my dear parents, Lin Yi, and my nieces, princesses Malak, Omayma, Myriam, and Asma, without forgetting Captain Zachary Yacin and all the family Dafir
– S.M.D
To my parents, Sairoopa and Prasad
– V.G
“The day the hippopotamus left the pool…”
If you had asked me 15 years ago what kind of book I would have liked to write, my answer would have been philosophy, politics, or poetry. I never would have imagined that the day would come that would find me writing about a topic such as fuel oils: substances still associated with childhood memories of images of oiled seabirds or with the smell of gasoline that instantly calls to mind car sickness.
But if you were to next ask me why I have written a book about fuel hedging, the first answer that might come to my mind would be because I am good at it and that experience has shown me that there are so many people out there who would benefit from learning about it, otherwise remaining disadvantaged and at the mercy of ruthless and sophisticated fuel derivatives practitioners. After giving the question a second thought, I might realize that I shouldn't try to protect any party. After all, there are, there have been, and there will always be fat cats and hungry dogs in this world. My subsequent answer would be that by writing this book, I might be unconsciously trying to defend the truth that this practice has merit, that there is a science behind it, and that mishaps of the past should in no way diminish fuel risk management techniques, but rather reveal the omissions of the unvigilant, the mistakes of the careless, and the incompetence of charlatans.
In 2013, when I first got in touch with Wiley, my intention was to write a book about commodity derivatives. But after long discussions with Vishnu, it became clear to us that a book focused on fuel hedging would be particularly useful. Vishnu Gajjala is not only my coauthor; Vishnu and I worked together in commodities structuring for seven years and because of that, I know Vishnu has a unique blend of expertise, discipline, and patience – essential to writing an outstanding book. We also share the hope that this book will serve as a continuing encouragement, reminder, and, when necessary, an exhortation for fuel hedging practitioners to think off the beaten path. We made it to this finish line together, and I cannot imagine going through this book-writing journey with anyone else.
