US citizens coming round to hedging

22/04/2009

US citizens are looking to hedge their exposure to high winter heating oil bills and summer gasoline hikes by locking themselves into fixed fuel contracts.

According to the Associated Press, the practice of hedging is growing increasingly popular across a range of commodities, with TXU Energy reporting that its most popular electricity tariff is one that offers a fixed price for up to two years.

Meanwhile, consumers are also taking advantage of low heating oil prices and are entering into contracts that provide them with a fixed price for fuel until next winter.

"If you're on a fixed income, that can be a great option because you don't want any surprises," commented Jennifer Lerner, an experimental social psychologist and director of the Decision Science Laboratory at Harvard University's John F. Kennedy School of Government.

Heating oil prices have retreated sharply since last summer, when they rose above $4 a gallon on wholesale markets in line with a record surge in the price of crude oil.