Of course the individual gas station owner wouldn’t do it in this case. It would be like a regional division of Exxon Mobil, Shell etc. You could say get a card that allows you to buy gasoline at $4.25 per gallon in all of the New England states or maybe a smaller area like a large Metro area, I’m not sure. But big enough to quell this worry. I have no clue what prices are state side now, so this may look crazy, they’re about $1.45 a litre here.
$4.50 in Chicago, was just in VA (near Roanoke) and saw $3.85.
It looks like this company is trying to implement just that: http://mygallons.com/ Basic idea is you pay $30 per year and they allow you to buy gasoline at current prices. You then can visit a participating gas station and fill up your car with the gasoline you have already purchased. Q: How do I find out what my price for gas will be? Upon activation of your MyGallons Card you will be provided the current price. Your pre purchase price is based on the current average price of self-serve regular unleaded gas in your home area.
CFA_Halifax Wrote: ------------------------------------------------------- > Of course the individual gas station owner > wouldn’t do it in this case. It would be like a > regional division of Exxon Mobil, Shell etc. You > could say get a card that allows you to buy > gasoline at $4.25 per gallon in all of the New > England states or maybe a smaller area like a > large Metro area, I’m not sure. But big enough to > quell this worry. > > I have no clue what prices are state side now, so > this may look crazy, they’re about $1.45 a litre > here. ExxonMobil will soon be out of the gas station business altogether. Most are owned by independent franchisees anyway. In any event, all you would be doing is collectively buying an unleaded gas futures contract. It wouldn’t be marked to market, but Exxonmobil would just hedge it out in the futures market. It’s exactly the problem we are trying to address and all we would be doing is putting more buyers in the market.
I’ve actually argued that we will see a revival of small fuelling stations all around soon, perhaps unmanned like tire pumps are, in order to refuel in the electric car age.
I want a solar powered unit the size of a trash can in my backyard that makes hydrogen so that I can fuel my hydrogen car. Not that is energy independence.
XSellSide Wrote: ------------------------------------------------------- > I want a solar powered unit the size of a trash > can in my backyard that makes hydrogen so that I > can fuel my hydrogen car. Not that is energy > independence. That might be a risky idea, given hydrogen is highly inflammable :-). However, we might have better solutions in future. @wanderingcfa - The site seems interesting. But will this work, I mean, this might require retail customers to follow and forecast the fuel prices, which is a tough job to do, and then again, the smart chaps can make lot of money. I am enjoying the discussion a lot tough, we had several perspectives and its really enlightening.
I got this open letter from United Airlines: Last week, crude oil hit an all-time high of $146, and the skyrocketing cost of fuel is impacting our customers, our employees, the communities we serve, and the economy as a whole. United, and the majority of other major U.S. airlines, are asking our most loyal customers to join us in pushing for legislation to add more transparency and disclosure in the oil markets. Please see the attached open letter from the leaders of the U.S. airline industry. An Open letter to All Airline Customers: Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now. For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation. Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs. Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper. The nation needs to pull together to reform the oil markets and solve this growing problem. We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.
Wow. The airlines are really biting the hands that feed them there. Anyone ever see the South Park episode about airline bailouts after 9/11. It seems so relevant now, I smell a sequel brewing!
just require delivery when buying a contract, that will take the speculators out very quickly
Gecco Wrote: ------------------------------------------------------- > just require delivery when buying a contract, that > will take the speculators out very quickly Bad plan. Futures contracts are for hedging all kinds of risks that have nothing to do with the deliverable. An airline who wants to hedge jet fuel has no use for gasoline, crude, heating oil, etc. though it might hedge jet fuel with any of those.
I agree, implementation would be difficult to imposible. Perhaps the fact that these contracts are being used for other purposes (other than the original intended purpose, which was in fact to take delivery) is part of the problem. The sheer breadth and scale of these markets would attract speculation, impacting those that are trying to manage cost associated with a key input to thier business As an aside, I am surprised you cannot get contracts on jet fuel. I would think that would be a pretty robust market.
You can trade jet fuel in forward contracts.
The question is does the oil futures contract now derive its price from the spot market price of oil, or has it reversed and now the spot market price of oil is derived from the futures contract. Which one is the derivative nowadays? Seems to be the latter.