Jet fuel cross-hedge using the nymex heating oil futures contract

On january 6, 2000, justin ross, a fuel purchasing director at cowboy airlines, wants to hedge his september jet fuel consumption at current prices. justin wants to hedge a total of 168000 gallons (40000 barrels). he buys a september new york harbor heating oil futures contract on the NYMEX a 70.28 cents per gallon (one contract size per gallon. the spot price of NY jet fuel on augest 29 is 69.99 cents per gallon. the spot price of NY jet fuel on august 29 is 39.99 cents per gallon. complete the worksheet following and answer all of the questions.

cash price (I.e., spot price) Futures Price basis

january 6 cash price _______cents/gallon

august 29 cash price_______cents/gallon

______cents/gallon gain _____cents/gallon basis loss

Is this a long hedge or short hedge?

did the basis strengthen or weaken between january 6 and august 29?

did the basis change benefit the hedger (i.e., was the basis change a gain to benefit the hedger or a loss to harm the hedger)?