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Want to pay a LOT less for your gas?

Discussion in 'Other Off Topic Forum' started by cohiba_man, Apr 4, 2004.

  1. cohiba_man

    cohiba_man Formula Junior

    Jan 23, 2003
    937
    Canada
    Full Name:
    John
    Here an idea I thought of last night in bed, I haven't researched it in any way so keep that in mind.

    There is a tradeable commidity future for Unleaded gasoline, traded on the Nymex I believe...I'm not sure of the contract specifications (i.e time period), but what would stop me from hedging my monthly gasoline purchases? I could buy say $400 worth of the future at the months low, and hedge gasoline prices for the month. I know its not a signifigant savings, but a neat idea nonetheless. For example, if I bought $400 worth of April gasoline at 67.3 cents (this is per litre, Canadian price, and the lowest its been for a while), if the price then went up to 75ish for the rest of the month and I ended up spending an average of 75 on the actual gas for my cars in the amount of $400 total, supposing the future closely follows actual gas prices (something I'd need to check out), I could sell my futures for 75 cents for a profit equal to the premium I spent on the gas over 67 cents, essentially locking in my gas expenditures at the monthly low. This could be done on a yearly basis as well with a better knowledge of the future of gasonline prices...kind of a neat idea, what are your thoughts?
     
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  3. Auraraptor

    Auraraptor F1 World Champ
    Lifetime Rossa Owner

    Sep 25, 2002
    11,440
    MO
    how do u know which grade you are getting?
     
  4. anotherguy

    anotherguy F1 Rookie

    Feb 22, 2004
    2,574
    Interesting idea. Just make sure you don't miss the close day or your in for $28,140. You would never have to buy gas again, but storing 42,000 gallons of unleaded at home would probably piss off your neighbors.

    -ag
     
  5. F-passione

    F-passione Karting

    Mar 31, 2004
    173
    Orange County, CA
    One way to get up to 5% more volume of gas at no extra cost is to buy it in the AM when the tanks are cooler. I read that in a penny pinching book once ;) Don't anyone get too technical on me over this one.....
     
  6. Artherd

    Artherd F1 Veteran

    Jun 19, 2002
    6,588
    Bay Area, CA
    Full Name:
    Ben Cannon
    Although I don't advocate this, the best way is to jimmy the pump, then fill, and leave.

    It has nasty side-effects however.


    My thoughts honestly are:

    Esp yearly, economic factors will change (read, we'll stop bombing Iraq to boost our own domestic economy by rebuilding Iraq) and 5 guys sitting at a table somewhere will say "holey cheese, we can each make $100mil today if we pump our volume up 2.5%" and gas prices will fall by 20 cents.

    And you'll still have your locked-in rate.

    It could be worth a shot on the monthly scale though.

    This would make actual sense if you set it up as a co-op and got a few thousand people involved all willing to pay your prices (whatever they ended up being.) and didn't run to Shell as soon as your prices don't look so favorable anymore.
     
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  8. cohiba_man

    cohiba_man Formula Junior

    Jan 23, 2003
    937
    Canada
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    John
    The monthly thing does make good sense, but being locked in during a 20 cent drop isn't that big of a deal if you've kept your lock-in price a consistent 5-10 cents lower than actual cash purchase, you've saved more over the months than you would on that rare event by not hedging.

    On the business side, thats what I've been thinking, selling a locked-in gas price service could be very simple, BUT it might put me at the mercy of financial regulators because technically I'm investing other people's money, or at least money they have an interest in.
     
  9. cohiba_man

    cohiba_man Formula Junior

    Jan 23, 2003
    937
    Canada
    Full Name:
    John
    By the way, I'm interested in considering the business side of this, personally its hardly worth the hassle.
     
  10. Fastviper

    Fastviper F1 Rookie

    Nov 20, 2003
    4,410
    Texas
    Full Name:
    Dash
    did you go to college or something?

    sounds very interesting I am going to look into it today and see what I come up with. if you only would of typed this a year ago?

    john
     
  11. Artherd

    Artherd F1 Veteran

    Jun 19, 2002
    6,588
    Bay Area, CA
    Full Name:
    Ben Cannon
    The only trick would be to insure loyalty in the (hopefully rare!) event you get locked into some not adventageous over pump prices.

    If you issued your own 'gas cards' (this shouldn't be too hard to do, though you'll probally have to get a bank involved as you will be issueing a form oc credit.) then few people would keep signifigant day-to-day track, and just reap the savings along with you.

    Of course, the real money maker might be to sell this to other gas stations, who could sure use some price protection. The disadvantage there would be 20cents more for one month of the year could kill them, even of they're 10c less for the other 11months.

    This certinly bears some thinking about.
     
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  13. cohiba_man

    cohiba_man Formula Junior

    Jan 23, 2003
    937
    Canada
    Full Name:
    John
    QUOTE:"did you go to college or something? "

    As strange a question as that is, no... I'm going to talk this over with an accountant and see what happens, it bears researching to say the least.
     
  14. cohiba_man

    cohiba_man Formula Junior

    Jan 23, 2003
    937
    Canada
    Full Name:
    John
    Also, if anyone has a direction to point me in towards pursuing this (a contact or someone who knows the business), let me know, but first obviously I have a lot of research to do.

    John
     
  15. cohiba_man

    cohiba_man Formula Junior

    Jan 23, 2003
    937
    Canada
    Full Name:
    John
    Does anyone have historical gas price averages for the U.S over the last couple years or a source for the same? EDIT: In fact I'm going to post this as a new thread so more will see it.
     
  16. Seth

    Seth Formula 3

    Feb 8, 2004
    1,532
    Texas
    my friends dad does this sort off...however.... he owns several (MASSIVE) oil tankers and already has loads of cash to spend, so he kinda of has a head start,

    anyways he said the fastest way to make money and LOSE money is in the futures markets....

    he also talked about buying futures in the weather(no joke) in farmers luck in the mid-west, very odd, but nonetheless intresting...
     
  17. cohiba_man

    cohiba_man Formula Junior

    Jan 23, 2003
    937
    Canada
    Full Name:
    John
    Yeah, I already trade futures, this is just an intersting niche for hedging.
     

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