Hedging Gas Prices

[DallasSteve]

Has anybody thought about hedging gas prices against future rises? I have, a little. Gas prices were a super hot topic when they were about $2 a gallon higher, but I bet people are thinking less about that now. About June I was seeing prices here in South Texas hit $5 a gallon, but not much more. (I know a lot of the country pays a lot more) I've been watching the prices fall steadily here for 2 months and the average is around $3.19 down here. I've even see a station break under $3.

My thinking is I'd like to lock in those prices and not be paying $5 a gallon again. I don't think the major companies offer a buy now/pump later plan, but maybe there is a way to do that in the futures market. If I bought gasoline options they would have a huge time premium that would kill the savings. But futures are different and I think they might work. With futures you are committed to the price at a later date. So if gas prices went down I would save money at the pump, but I would lose money on the futures. It's a wash. And the reverse is true if prices go up. Still a wash.

Anyway, if anyone has more knowledge about that I invite your comments. Maybe it's a really lame idea; that's why I thought about this forum. If it's a good idea I'll keep an eye on prices and I may make a futures trade in my TD Waterhouse account when prices are looking good to me.

[LMHS]

Grit dog wrote:

LMHS wrote:

Grit dog wrote:

LMHS wrote:
Gasoline has a short "shelf life".

You missed the point....hedging on futures isn't about the shelf life of fuel, lol.

No dearheart, I did not miss the point. I was responding to the "fuel storage" people.

Ohhhh ok. Well. You also missed the sarcasm of the “fuel storage” posts then.

No. I well remember reading several posts on a different forum where a guy was having trouble with his generator. Someone told him it needed to be grounded by driving a solid copper rod into the ground before plugging his RV into the generator. Can you guess what happened when he did this at NF campground and the park ranger saw him? Sarcasm and "jokes" often do not translate well.

[DallasSteve]

PButler96 wrote:

LOL.....look at what all that Covid Hoarding caused......you got it, hyperinflation lol. Well at least inflation with some help from some certain folks who will remain nameless.

Inflation was caused by hoarding? That's a new one. I like this chart from the St. Louis Fed which shows the growth of the M2 money supply starting with the pandemic due to government handouts, budget deficits, and easy money policies from the Fed. It's astonishing how fast the money supply has grown. When the money supply grows faster than GDP you get - wait for it - it's coming - the answer is:

Inflation

[time2roll]

JRscooby wrote:
Somewhere a guy sits in his garage looking at 35 cases of Campbell's Pork and Beans and wonders how he could possibly stomach another can.

That man has never been hungry, really hungry. Worst case they could be traded if times were truly desperate.

Buying pork and bean futures on Wall Street may have no value in a crisis to get food to eat.

[Grit_dog]

LMHS wrote:

Grit dog wrote:

LMHS wrote:
Gasoline has a short "shelf life".

You missed the point....hedging on futures isn't about the shelf life of fuel, lol.

No dearheart, I did not miss the point. I was responding to the "fuel storage" people.

Ohhhh ok. Well. You also missed the sarcasm of the “fuel storage” posts then.

[JRscooby]

Somewhere a guy sits in his garage looking at 35 cases of Campbell's Pork and Beans and wonders how he could possibly stomach another can.

We joked about how much TP was returned for refund when rent was due.

[PButler96]

dedmiston wrote:
Hoarding as a hedge against inflation is a good way to trigger hyperinflation.

LOL.....look at what all that Covid Hoarding caused......you got it, hyperinflation lol. Well at least inflation with some help from some certain folks who will remain nameless.

Somewhere a guy sits in his garage looking at 35 cases of Campbell's Pork and Beans and wonders how he could possibly stomach another can.

[NamMedevac_70]

Since I no longer full time and only occasionally part time camp with frequent fishing trips without RV then this is my hedge. Also reduced non necessary trips and driving except for fish/camp trips during cooler months. Works for me with no risk of losing money. Cheers

[time2roll]

I would sooner invest in a SP500 index fund vs gasoline futures.

[LMHS]

Grit dog wrote:

LMHS wrote:
Gasoline has a short "shelf life".

You missed the point....hedging on futures isn't about the shelf life of fuel, lol.

No dearheart, I did not miss the point. I was responding to the "fuel storage" people.

[cptqueeg]

There were/are contracts w lid prices for home heating oil offered to consumers where the oil company did the hedging for all their customers. Having heated w oil for ~30 years I imagine that this latest rise was devastating to some. Glad I left that world behind a few years ago.

[dedmiston]

Hoarding as a hedge against inflation is a good way to trigger hyperinflation.

[time2roll]

shelbyfv wrote:
Probably the most realistic hedge is a fuel efficient vehicle for our non-towing transportation.:)

x2
No day to day gas since May 2011.

[1320Fastback]

There was a story about doing just this on 60 Minutes or the like a long time ago, maybe a decade. Seem to remember you could deposit whatever dollar figure you wanted into the gas bank and the pump would reset to the price you bought it for. I do not remember what the business name was nor which brand of pumps you had to use.

[Grit_dog]

LMHS wrote:
Gasoline has a short "shelf life". I believe it's 6 months but I'm sure someone knows and will post it. There are stabilizers that can be added to the fuel that will add a couple months of usability to the gasoline. Diesel has a longer "shelf life". You can store fuel in above ground fuel tanks just like on farms and residential home heating oil. Gasoline is more volatile than diesel.

You missed the point....hedging on futures isn't about the shelf life of fuel, lol.