I've been thinking of this for awhile.


Why Let Drivers Speculate in Oil Futures?

Gas prices are way down. Will they stay down?

Why not let drivers try some speculation on their own behalf, and reserve an extra hundred or thousand gallons at fixed prices today?

Drivers, like farmers, don't like the uncertainty of prices. Drivers like it well enough when gas prices fall, and farmers like it when prices for their crops rise. But sometimes gas price go up and stay up just as prices for farmers crops go down. Farmers can enter futures contracts to lock in prices for some percentage of their future crops. Why not let drivers lock in future gas prices?

Instead of point-of-sale terminals at gas pumps asking if we want a car wash, the could ask: "Would you like to reserve more gas at this price? (With options to choose 100, 200, 500, or a 1000 gallons.)

Exxon, BP, and other firms, along with futures traders would be happy to take the other side of these purchase reservations, for a fee.

Of course state regulators would likely block such speculations as too risky (though they run lotteries out of the same gas stations).





Speak your mind

3 Comments so far

  1. Sam on December 16, 2014 4:24 pm

    I have thought the same thing. Would options be too complex of an idea to implement for the mainstream consumer of gasoline? Gas stations could sell weekly (or monthly) call options (for a hefty premium) to customers alongside all of the lottery tickets and scratch cards. It would appeal to the avid gambler and the bargain buyer.

  2. TC on December 18, 2014 5:52 am

    > Why not let drivers lock in future gas prices?

    German homeowners almost do this with heating oil. Typical German household's HO tank is 1500-2000 gl. (or rather 6000-7500 litres). They fill up and inventory in the summer, when HO prices are low, and thus minimize purchases during winter demand season

  3. Nemo on December 24, 2014 12:10 pm

    it’s coming


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