With the recession now in full swing commodity prices have been coming down dramatically as demand drops.  While $4 gas is still fresh in your mind you may want to consider the following simple hedging strategy to protect yourself from the inevitable upswing in prices once the recession ends.

Let’s say that you believe it will be five years unti the next recession and you currently spend around $2K a year on gasoline at current prices.  USA Gasoline Fund (UGA) is an ETF that tracks the average price of gasoline in the United States.  If you bought $10K of UGA today and then sold 1/5th in a year, then 1/4th the following year and so on this would immunize you from most of effects of rising gas prices.  Of course this is not a perfect hedge because you buy gas weekly instead of annualy but it should work fairly well.

You can also do the same thing with the heating oil (UHN) and natural gas (UNG) if you use those regularly.

If you do this regularly every recession, it should help even out expenses and save a few dollars as well.  Of course, it is important to remember and be comfortable with the fact that prices can go down further and hedging will prevent you from enjoying further savings from more price drops, but that is the cost being protected from higher prices.

Source: http://bespokeinvest.typepad.com/bespoke/2008/11/lock-in-low-gas-prices.html