Hedge Your Gas Prices!

I know, this is a topic we here at DQYDJ have covered before… specifically back on July 2nd, 2009 when gas was averaging the incredible price of $2.63.  This specific article was inspired by the recent comeback gas prices have made – gas today average $3.33 a gallon nationwide, according to Fuel Gauge Report from AAA.  However, today we’re going to give you the opportunity to calculate what it would take for you to hedge your gas prices with our nifty gas price hedging calculator! If you read this in a feed, you’ll probably want to click over to the web site to see this post.

Hedge Your Tank

As before, our hedging depends on the performance of the ETF [[UGA]]… which is tied to the performance of gasoline futures contracts.  When we last checked in 2009, gasoline was $2.63 a gallon and UGA was trading at 31.93.  Now it’s trading at 47.38… a nice 48.4% gain to go along with the 26.6% gain in gasoline price.

Does UGA track gasoline perfectly?  No… in fact some of the price increases over the last 1.5 years may have been absorbed by gas stations in the interest of competition.  You also would have had to pay some tax on your gains if you held UGA outside a retirement account, so the tracking isn’t that bad.  Let’s assume for our purposes that for our hedge UGA will track your gasoline costs perfectly from here on out.

And always, your investing is up to you. Take none of this as investment advice, and go talk to a professional if you have questions. Have fun!

Thanks to Ironman at Political Calculations for his javascript help!