Does GM Hedge?

Monday, February 13, 2006 | 09:15 AM

Why hasn't GM ever hedged against Oil/Gasoline price increases?

Or do they, and we just never heard about it?

That question came up several years ago in a late night conversation, but I never followed up on it.  Airlines do it, many Oil companies  do it -- so why not GM or Ford? Both companies have become so reliant on big SUVs, pickup trucks, and other energy inefficient vehicles, that they are so obviously subject to the vagaries of the Crude market.

I mentioned this vulnerability to oil's pricing on Power Lunch about a year ago (Sell GM att $45 turned out to be a pretty good call), and had an interesting discussion with another guest in the green room about it.

But that's now history, so lets make this propspective:  What other companies' profits are vitally dependent on a commodity that could see big price increases? Can they hedge against a big move? Should they?

Consider: Intel & Silicon, Utilities and Natural Gas/Coal, Boeing and Aluminum, Coke and Sugar.

Use the comments section to suggest firms that should consider a hedge -- but don't.

Monday, February 13, 2006 | 09:15 AM | Permalink | Comments (26) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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How would this help? For your other examples, the commodity serves as a manufacturing input to their actual salable product or service. For GM, the cost of oil is mainly an issue for their _customers_.

The equivalent analogy would be Intel hedging against the electricity it cost for their customers to run the PCs?

I can't see how GM could make something like this work, unless they did one of those "free gas for a year" deals fleet-wide.

Posted by: M1EK | Feb 13, 2006 9:22:28 AM

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