General information only, last reviewed October 25, 2026. Full notice at the end of the page. A date on this page has passed. Check the current rule at the source before you rely on it. Dates to watch
Hedging is locking in a fuel price ahead of time to protect your margin. You give up the chance of a windfall in return for safety from a painful price spike.
Fuel prices swing hard and fast, and a business that buys at one price and sells at another can be wrecked by a sudden move. Hedging is the way some companies tame that. Using futures, contracts traded on an exchange that fix a price for a future date, or similar tools, they set part of their cost in advance instead of leaving it to the market.
The trade is even. If you lock a price and the market falls, you miss the cheaper fuel. If you lock and the market jumps, you are protected. Hedging is not a bet on prices going up or down. It turns a wild, unknown price into a known one so you can plan and quote with confidence.
It matters most to a business that has already promised a fixed price to a customer, such as a fleet on a set contract or a heating oil dealer offering a capped winter price. Hedging lets them stand behind that promise without gambling the whole margin on where the market goes.
In useThe jobber signed a fleet to a fixed price for the year and hedged the gallons, so a midwinter spike could not turn that contract into a loss.
See also Futures, Spot price, Working capital