Ideas

To make this work you would have to make a product that was differentiated from Hedgestreet: http://www.hedgestreet.com/.

If I recall, one of the .coms did this back in the late 90s. I *think* it was priceline who would allow you to forward price gasoline.

It is really hard to get people to participate. This sounds like a great idea right now, but people will go crazy if they lock in $3.00 gas for a year and after 2 months the pump price drops to $2.00.

NPR had a story on several local versions of this.

The true obstacle to the idea is inherent in the word "local".

How do you plan to distribute the pre-purchased gasoline/heating oil?
(heating oil should definitely be included in any such enterprise)

It's easy enough for one local gas station/chain to set up a system, but you'd have to work out distribution with at least one major national oilco/station franchise (7-11 perhaps? Sheetz?), and i'm not sure what their incentive to participate would be.

Otoh, it might be easier to work out a deal with a national heating oil distibutorship (although if i were them i'd just steal the idea and put all that up-front capital into my professionally managed, likely more efficient commodities division.)

Thank you for your comments and input so far, fellas. I greatly appreciate the fact that you have taken the time to respond and to consider the implications of what I'm proposing. You have no idea how grateful I am. What I was proposing was something that's extremely simple for the consumer but uber-effective.

The beauty of this idea is that if it's done correctly, with the right "mix", if you will, it can be differentiated enough from existing products but not too far out there that it's a completely unproven business model. I was not aware that an idea similar to mine existed on a local level - even so, the idea that I am proposing takes this to the national level.

If we are wanting to do this on a national level, you'd probably want to come up with some sort of algorithm to optimize the protection for everyone without cutting too much into profits. Automobile insurance, or any insurance, for that matter, works in a similar manner (although I don't know if they use algorithms similar to a broker's). They take into account various factors when giving someone a policy - their age, the car's make and model, the color of the car, the state, the city, etc.

I think there might be two approaches you could take on this. You can make the service with the interest of protecting our "company's" profits and lock the consumer into an inflexible plan or service. Sort of like insurance back in the day. Yes, we'd make money, but we're screwing the consumer. When the consumer is screwed over, they get upset and take business elsewhere or don't even bother. The other way to do this is to make it an extremely flexible and practical investment for the consumer - while profits wouldn't be as great from each individual customer, I believe we would be able to make up for this with the volume of customers. In addition, I think that with the creative resources that are available here at Cambrian House, we may be able to come up with an ingenious way to market this and to get people to participate.

Concerning the price of gasoline dropping back to $2.00 a gallon, I don't know if that will ever be a reality, and if it does
happen, I don't think it would last for long. As far as the fuel economy in this nation goes, we're in a transitory period - something's going to have to give. Either more efficient vehicles need to be created, alternative fuels, government intervention - something. We can't go on like this forever. Even then, any long-term solution to the oil crisis is going to take time to develop an implement - it won't happen overnight. In addition, nothing in this world is independent of the rest of the world - China and India have growing economies that are hungry for petroleum products, so even if the U.S. cuts down on consumption, it won't make too much of a difference.

the_minister, I completely agree with you that heating oil would need to be an element of this plan. There may be various ways to get national oilcos to participate with this - customer loyalaty, brand awareness, increased sales in the convenience stores, increase volume, etc. Right now, many Americans see companies like Exxon, Texaco, BP, etc. as the enemy - this may help with the PR. Although there may be a way around having to get the support of the big oilcos.

RiskyBiznatch, I don't think we would need to have customers look into the plan for a year. We would be flexible and allow the plan to work on a month by month basis. They could book up however many months they want to hedge for. Of course, ideally the savings would be greater if they did this for a year - kind of like cell phone plans.

I feel that many Americans are intimidated by money and investing - nobody likes getting screwed out of cash though. If we make this accessable, affordable, and effective, then the idea has much merit.

BigHal, for example, the IM translation program the CH is working on, is not a completely revolutionary idea - but it's a good one because it does something just a little bit different than previous IM programs. Same with Gwabs - there are tons of fighting games out there - this one's just a bit different. Same with this idea - it's just a bit different, enough to make it work. It will take a little bit work, but I think it would be worth it.

Once again, thank you very much for the input! Let's remember that this the idea stage where we iron-out some of the details. The idea is still in its infancy and needs to grow. This, of course, is only possible with the help of people like yourselves. Thank you, thank you, thank you!

I thought of this too a few months ago (coward that I am I did not have the guts to put it up) . I think this could work.

My thoughts are that it should be a simple loyalty card like thing. You probaly dont even have to store the gas since you could buy a hedge on the back of it and ride the price.

One could also limit the amount of gas a person can buy, so as to reduce individual exposure, and your own neck.

Hey guys. The topic is hot again, now that the gas prices are sky rocketing. Check out restart2.blogspot.com ! The guy put up an example calculation what it would cost to insure yourself against rising gas prices. Enjoy!!

PS: Here is the link: http://restart2.blog...st-of-insurance.html