High finance for regular people, part 1

You've probably noticed the TV ads in which Chrysler promises purchasers of new cars that they won't pay over $2.99 for gas over the next three years, good for up to the first 12,000 miles each year. The Let's Refuel America promotion is done in conjunction with Pricelock, a startup that appears for the moment to have no other customers besides Chrysler. In exchange for other new car incentives, Chrysler gives you a special credit card that you can use at gas stations to get the special rate.

If it's done well, programs like this could revolutionize the way people budget. The premise itself has been around for centuries in the form of futures markets (for a succinct explanation, see Trading Places). However, using commodities exchanges to buy contracts for future delivery of fuel, food or anything else, you'll need experience in the markets, some way to receive and store what you've ordered and the need to buy in increments far greater than what any individual or family would need. For example, the New York Mercantile Exchange trades gasoline futures in increments of 42,000 gallons.

The big futures markets may be useless to you or me, but bigger players that have made wise plays can reap the benefit of locking in prices years in advance, making budgeting simpler and insuring against price jumps. Southwest locked in its price for jet fuel when it was far cheaper, a move that looks very savvy in hindsight.

But what about Joe Consumer? He's seen gas prices rise, mortgage payments explode and supermarket bills jump. Normally, the only response would be to cut back: take the bus and dump the arugula for iceberg. Southwest can fight instability, but regular folks with mouths to feed are left to twist in the wind. If Pricelock ever catches on beyond this Chrysler deal, it could be the beginning of something big: consumers could lock in prices for everything from gas to spaghetti.

The tale of the last quarter-century has been of one of a great risk shift from the highest levels of government and corporate America to individuals. Union membership is down, pensions are being replaced by 401Ks and the social safety net is being slowly dismantled. People can reap enormous benefits from, for example, managing their own retirement accounts. However, stability has its benefits and anyone who can give people the same peace of mind as the major players can potentially make a whole lot of money.