In the past, we’ve thought through financial tools which bring concepts to your own arsenal. Today we present a way for you to hedge your gas prices with our nifty gas price hedging calculator!
Hedge Gas Prices with ETFs – Your Tank Will Thank You!
Our hedging depends on the performance of the ETF UGA. It’s tied to gasoline futures contracts.
Change the price below to whatever UGA is trading at now and tweak some of the assumptions. DQYDJ will automatically calculate exactly what you’ll need to buy to hedge against gas price changes.
Does UGA track gasoline perfectly?
No… it’s not an exact match. Price increases may be absorbed due to fierce competition, while quick falls might not appear as quickly as the pump itself.
You also have to pay tax on UGA if held outside a tax-advantaged account.
Great Fun, But is This Style of Hedging Practical?
There are a lot of moving parts here (and not just in your engine).
You might drive more or less this year, you might buy a new car, the ETF might not perfectly track the price of gasoline, your state might change the mixing rules, your state or the Feds might increase gas taxes… and so on and so forth.
Regardless, it’s fun to think about the possibilities of hedging gas prices. (Even if getting an exact hedge in place is impractical.)
And always, your investing is up to you… but here’s how you can try hedging if you’re interested!