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My latest nut job business idea " Gasoline Annuity"
Old 11-30-2014, 03:16 PM   #1
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My latest nut job business idea " Gasoline Annuity"

The I like oil thread got all of my 3 brain cells fired up at once. This goes against all conventional business practices of retail I know of.

Hedging at the retail consumer level via an annuity.

When prices are way down , like now, a retail individual or small business buys say , 4000 gallons at a lump sum fixed price, from an annuity provider ,to be delivered at the a rate of 400 per year ,at either a specific brand or any brand via a debit card .

Large business consumers with the cash to do so have hedged for themselves forever. ( A long time ago , Southwest Airlines was rumored to have cash in a high interest rate environment ,and hedged on fuel, giving an advantage when the other majors were so broke , many could not.


Do I need professional mental health services , or could this actually work. Just the concept, I have no ambitions of even pitching this idea to someone who could make it happen
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Old 11-30-2014, 07:03 PM   #2
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Couldn't you achieve the same financial effect buying laddered cash-settled gasoline futures?
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Old 11-30-2014, 07:20 PM   #3
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My 3 brain cells can't get past the word annuity in this idea.
It sounds more complex than I prefer. I'll stick with index funds.
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Old 11-30-2014, 07:22 PM   #4
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I think there's already someone doing this: Sick Of High Gas Prices? Hedging Strategies For Your Everyday Costs | Seeking Alpha

Not sure if the company listed in the article is still around.

However, I don't see a point in hedging something that is a small portion of our budget. Hedging costs so unless fuel were a major budget item, I wouldn't bother. Perhaps if I were still working and had a 1hour+ commute each way (yuck).
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Old 11-30-2014, 07:29 PM   #5
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I don't think insurance regulators would allow an annuity company to issue such a product. Sorry, cash benefits only.

If you want to play oil prices, use options or futures.
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Old 11-30-2014, 09:01 PM   #6
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Quote:
Originally Posted by Lakewood90712 View Post
The I like oil thread got all of my 3 brain cells fired up at once. This goes against all conventional business practices of retail I know of.

Hedging at the retail consumer level via an annuity.

When prices are way down , like now, a retail individual or small business buys say , 4000 gallons at a lump sum fixed price, from an annuity provider ,to be delivered at the a rate of 400 per year ,at either a specific brand or any brand via a debit card .

Large business consumers with the cash to do so have hedged for themselves forever. ( A long time ago , Southwest Airlines was rumored to have cash in a high interest rate environment ,and hedged on fuel, giving an advantage when the other majors were so broke , many could not.


Do I need professional mental health services , or could this actually work. Just the concept, I have no ambitions of even pitching this idea to someone who could make it happen
Go for it Man! Report back sometime.

Ha
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Old 11-30-2014, 10:31 PM   #7
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Originally Posted by haha View Post
Go for it Man! Report back sometime.

Ha
The business plan ? , or the mental health screening ?
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Old 11-30-2014, 10:36 PM   #8
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I think there's already someone doing this: Sick Of High Gas Prices? Hedging Strategies For Your Everyday Costs | Seeking Alpha

Not sure if the company listed in the article is still around.

However, I don't see a point in hedging something that is a small portion of our budget. Hedging costs so unless fuel were a major budget item, I wouldn't bother. Perhaps if I were still working and had a 1hour+ commute each way (yuck).
I think they are out of business, lots of dead links on the company website.

Back when I was working , racking up over 30k miles / yr on commute mostly was driving an 18 mpg beater , was a chunk of money on fuel. Got something much better mileage when I quit. If gas prices had dropped at the time , I'd still be driving that 18 mpg beater.
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Old 12-01-2014, 04:07 PM   #9
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At one time I had heard about a gas bank. Not sure this is the one or not.

https://www.firstfuelbank.com/

One way to lock in low price fuel if you are in the area.
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Old 12-02-2014, 08:01 PM   #10
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Conceptually, it sounds like a good idea. It would take a substantial company to stand behind it (and not go out of business when the going got tough.) My guess is that is exactly what would happen to any "middle-man" type company that got involved in such an endeavor. They would reap and either spend or distribute their profits when prices worked for them. When they were "stuck" holding the wrong end of the contract, they would simply fold up the tent.

It would take an Exon or such to be willing AND able to make it work. Since they don't deal in 4000 gallon contracts.... As they say, YMMV.
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Old 12-02-2014, 09:30 PM   #11
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Other than discretionary driving for vacations, I don't really put a lot of miles on my car. I think I fill up about once a month (but not every month) and walk to most destinations. If gas gets really expensive, I'll just vacation a little less or buy a hybrid or electric car.
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