[H8crilA]

The oil trade structure actually does make sense, because this is how you buy oil, or really any commodity that takes so much space and weight. You order it ahead of time, then if you hold till the contract settles you are allowed to pick it up from the place and in the way designated in the contract specification. In fact you are obliged to pick it up, that's why prices can go negative in exceptional situations. Prediction markets are then just a clean cash-only derivative.

Most of the other prediction markets seems rather stupid to me (they are completely detached from any real world activity), other than their prices being a fairly reliable source of information for bystanders.

[slg]

>The oil trade structure actually does make sense, because this is how you buy oil, or really any commodity that takes so much space and weight. You order it ahead of time, then if you hold till the contract settles you are allowed to pick it up from the place and in the way designated in the contract specification. In fact you are obliged to pick it up, that's why prices can go negative in exceptional situations. Prediction markets are then just a clean cash-only derivative.

You just described what is happening, you didn't actually provide any reason for why this is good for anyone but the individuals profiting from it.

[nine_k]

The point is that's a dubious derivative of a market that makes sense.

As usual, it's a tax on naive and those who get addicted; the twist is that they are willing to pay it, demand and beg to pay it, so providers spring up, legal or not.

[Tade0]

Airlines in particular prefer to have a predictable price of fuel, whatever it might be, so they buy futures.

[lesuorac]

Do they? Afaik, they don't [1].

> WONG: However, Gerry says most of the major airlines in the U.S. eventually soured on fuel hedging. One reason - the Wall Street transaction fees to make these hedges got expensive.

> WOODS: Plus, Gerry says the airlines found that they could make money the old-fashioned way by raising prices. Today, none of the major airlines in the U.S. are hedging.

Hedging is one of those things that sounds cool but then when your service is x% more expensive than a competitor and you lose customers you just stop doing it. It's kinda like being on AWS; when everybody has an outage together nobody asks "oh what can be done differently".

[1]: https://www.npr.org/2026/03/27/nx-s1-5759203/fuel-hedging-on...

[Tade0]

That's the US. Meanwhile in Europe the practice is alive and well:

https://www.irishtimes.com/business/2026/03/25/ryanair-to-ho...

> European carriers have hedged about 80 per cent of the fuel they need for this year and typically take out new hedges on a rolling basis to lock in future prices.

[wallst07]

Almost every very large company that relies on commodities will have a treasury desk whose sole purpose is to work with future markets, its very common practice. It doesn't matter if one npr article has a anecdote, it exists.

[lesuorac]

"Almost"? Can you can name 1 with evidence?

Like if I look up home depot they talk about price volatility and that's the exact opposite of what a hedge produces. I'm honestly starting to doubt if they hedge at all; like why bother using Wall Street as an intermediary and just talk to your suppliers.

> [1] This was another historic quarter for lumber price volatility. During the first few weeks of the second quarter, prices for both framing and panel lumber reached all-time highs before quickly falling from their peaks. As an example, during the second quarter, framing lumber peaked at approximately $1,500 per thousand board feet before falling over $1,000 to approximately $500. While pricing for both framing and panel has come down from the peaks, the average price during the second quarter was still significantly higher than the same period last year. Inflation from core commodity categories positively impacted our average ticket growth by approximately 420 basis points during the second quarter.

[1]: 2021 Q2 - https://ir.homedepot.com/financial-reports/quarterly-earning...

[slg]

Is there a name for the phenomenon of when someone provides a single explanation that is so inconsequential that it ends up being counterproductive because surely they would have given a better explanation if one existed?

If your go-to reasoning for why we need prediction markets is so airlines can have more predictability in their fuel costs, you're inadvertently making a solid argument that we don't actually need prediction markets. And this isn't even getting into the other ways these airlines could satisfy the same need.

[fyredge]

That still does not satisfactorily answer the question though, why don't they just sign a purchase order with N month lead time? That still gives a well defined price ahead of time.

[nine_k]

But that's literally what a "future" is.

[strulovich]

The people who need the constant price do that, but creating this contract generates an investment at the same time. The person promising the price is taking a premium to take the risk, they can the sell that risk in a free market.

[tyre]

are you saying that the people trading on inside information about military operations are… producers hedging exposure?