Gas futures at the gas pump?

Commodities traders buy gasoline futures all the time. Could they work at the gas pump? Imagine a big gas chain willing to sell you future gas today. You would buy a coupon, good for 15 galons of gas in August, the month you plan a big family trip in the minivan. You're afraid the high prices in the future might hurt the trip, you can be protected against them. The futures might even cost less than gas at the pump today due to widespread belief that supplies will open up. In times of heavy fear they would cost less. You could even buy some of your gas years ahead (from a big chain you know will be around) and then sell them on eBay if you don't need them. Would you need a commodities licence to do so?

Would anybody buy them?

(Thanks to Kathryn for this idea.)

Very good work, really well done. See you again sometime at this interesting place. Say hi to all people around the
world.

Very good work, really well done. See you again sometime at this interesting place. Say hi to all people around the
world.

I think it's a good idea, I only wish there were a way to make a small business out of it. The natural candidates to run it are the retail oil companies. No, you don't need a commodities license to be a customer, I'm pretty sure. What makes this especially interesting is that the gas futures market is currently in "backwardation". That means that future delivery months are cheaper than spot months.

Doing it as a minor hedge I can't imagine any problems with; kinda like a "Gift Certificate" for a specific product.

Doing it as an investment strategy (e.g. trading the contracts on eBay) could be a different story, probably crossing into the realm of energy futures contracts.

And doing it for entertainment purposes would presumably go through the bookies in Vegas.

As a student that will soon be driving, saving money on gas is definitely on my mind. I'd want to do a lot of research first, but I think that I'd be confident in gas prices staying close enough to what they are now or rising higher that I'd be willing to buy my future gas at least up to election month.

Hi Brad

Normal gas futures and oil futures are usually traded and not necessarily convertible i.e. it is completely different for you to buy a future for light crude oil and then your average fuel station like Shell or Exxon-Mobil to actually honour it.

The idea however is sound - as long as you can:

- Get the major oil companies on the road to agree to honour these cash "gift vouchers"
- They will essentially be gift vouchers redeemable only AFTER a certain date and UPTO a certain date.
- The company that sells them makes a market in them, i.e. facilitates their trading on their own. eBay is not appropriate, since you can create a trading platform yourself (or I can!) for trading this single commodity.

Get in touch about this with your ideas since I trade.

Regards
Amit

Just surfed in and found this really interesting place here. A lot of good stuff for everybody.
Go on like this and i will surely visit your site again sometime.

sounds good.

Pump Futures

I blogged about this concept recently as well. One of your readers directed me over here. Shows great minds DO think alike. We need Pump Futures now, more than ever. Do you suppose anyone is working on it?

Check out my post on this topic

Best Regards,

Michael Carruth

future commodities

i enjoy your thinking!... but do we have to re-invent the wheel again? doesn't the major US airlines already buy jet fuel futures (now and forever) to prevent the exact same thing that their saying is the reason for boosting fairs and curtailing services?!! so why hasn't anyone asked the CEO of Delta Airlines
what happened to their futures?!!

They probably did

I would suspect they are major buyers of them. But that only lasts for so long. Fuel has doubled, airfares have not yet. And the more other people think fuel is going up, the higher they cost.

Futures are bought for two reasons:

  • As a speculation, a bet that the price will change
  • To lock in cost when you can’t gamble on where the price will go.

The airlines would be primarily in the latter category, but you can only be there so far. Remember that half the time the futures will end up costing more than the real price.

mygallons.com

Check out mygallons.com, been a working process for a while. Great idea, just a lack of infrastructure. Good time to buy now though.

TomorrowsGas.com

Check out tomorrowsgas.com

the site is awkward but they're open for business

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