Should the Department of Defense hedge oil prices in order to save money?
Knapp, James W.
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This paper explores one possible solution to the DoD problem of increased expenditures due to rises in the costs of jet fuel. This paper provides a brief overview of the futures market and of commercially accepted practices utilized by the airlines within the futures market. The goal of this paper is to explore the feasibility of the government entering the futures market in order to reduce the current DoD jet fuel cost and whether the potential savings would outweigh the associated risks and costs. This paper briefly discusses the current method of procurement and examines the commercial practices of futures trading, focusing on the airline industry which offers the greatest affinity to the DoD.
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