I think it was Bills who mentioned that oil ETFs were a good hedge against rising fuel prices as when one goes up the other rises also. I'm trying to learn how to analyse investment opportunities so this is my first attempt.

I have the price of Brent crude oil in dollars, inflation adjusted, from 1988 in yearly averages. I also have the pump prices of UK unleaded and diesel, non-inflation adjusted, in pound sterling. Do I need to adjust this pound sterling price according to inflation? Do I also need to find the currency exchange rate for US$ to Pound Sterling?

My chart looks like this.

Year/Unleaded/Diesel/Brent Crude/Ratio A/Ratio B

Ratio A and B are the price of UK fuel divided by the price of Brent Crude. I will then look at the standard deviation of these numbers to find out if buying oil ETFs is a good hedge against rising oil prices.

If anyone wants me to do this for US oil prices I can do that too. I consider this work experience of sorts and I need that right now.

And lol at Americans complaining about gas prices

It wouldn't be a perfect hedge because there's oil processing and refining technical details, aka timing issues. Futures specualtion also effects everything and depending on what the underlying ETF holds a majority of will determine how far it moves vs petrol.

So it'll work somewhat over the long run, but it won't track perfectly and I wouldn't be surprised to see weirdness. ETFs are weird anyway in my books.

What would you suggest someone invest in if they wish to hedge against rising fuel prices?

You probly want to do some research on the crack spread..
If your talking about hedging your own unleaded consumption, once your not talking about actually buying/selling gasoline futures the other variables will probly kill off any hedge you have on. Not to mention 1 contract will be far too much gasoline compared to what you will use in the time frame so the whole idea is a bit pointless.