Locking in the price of diesel

[David Brady]

Hi George,



Here's the link to the ETF's:



http://www.unitedstatescommodityfunds.com/



They also provide oil, heating oil, and natural gas ETF's.



I neglected to mention that taxes will need to be paid on

capital gains, your tax consequences are you unique to you,

but with some planning the tax consequence could be taxed

at the capital gains rate as opposed to income tax rates.



Food for thought.





David Brady

'02 LXi, NC



George Burke wrote:

Thats very interesting David. I want to go to Texas and back this
coming spring, and then a fairly shorttrip to Ga. and Tn. later will
be the extent of my travels. Does this co. also give you the price of
propane. Just before gas prices went downI surveyed the Charlotte area
propane market. It was $4.29, $4.19,$3.71, and U-haul wasat first
$4.50, but after I kind of protested and mentioned $3.71, he said see
the manager and you might get it for $2.99, but you have got to ask.
Has anyone in the N.C., S.C., Ga., or Tn./Va. area filled up recently
and have gotten a better price? Also is it common practice for folks
like U-Haul to deal with their customers this way? Thanks, George Burke
1977 FC31 gasser

On Fri, Nov 28, 2008 at 7:57 PM, David Brady
<"dmb993@earthlink.net">
wrote:

Folks,



The average price of diesel, country wide, is around $2.50

per gallon. We all know that in the long run, prices will go

up. I stumbled upon and ETF that allows you to lock in the

price of gasoline. The ETF is managed by a firm called

United States Commodity Funds LLC (I have no financial

interest). Although USCF doesn't have an ETF that tracks

diesel fuel prices, gasoline seems to be a reasonable

approximation. The gasoline ETF has a ticker symbol: UGA



Today's price for UGA is $23.96. Assuming I'll travel 10,000

miles next year, and I get 7 mpg, I'll need 1500 gallons. At

today's diesel prices I'll spend (1500 x 2.5) = $3750, so I

buy $3750 worth of UGA. As the price goes up at the pump,

I get the same percentage movement in UGA. After each

fill up, I call my broker and sell the same amount of UGA.

This way prices can fluctuate all they want but I'm guaranteed

to not spend more than $2.50 per gallon for my next 1500

gallons.



Of course, as with any futures contract, the price per gallon

may go down (not likely). In this case, I'll spend less at the

pump, but my UGA holding will decrease by the same percentage.

In this case I'll probably not sell UGA and simply hold it till

prices appreciate.



David Brady

'02 LXi, NC

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