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"Hedging" in its simplest form just means a balanced response to risk. Like "hedging your bets". People often diversify their risk in investments by not putting all their money into one stock or fund.

Speculators are people who buy and sell options and/or commodities. Oil and corn are commodities, which you or I can buy and sell. But, I can also sell you the right to buy corn at a fixed price tomorrow. If you think corn is going to go up, you can buy my option. You can exercise that option, and actually buy the corn, but you don't have to.

Options are only ultimately useful if in fact the actual change in price matches the prediction. If you buy an option planning on a price drop, you better hope the price drops. Same-same for a price increase.

People "hedge" against the future price of oil, by buying oil today. (Or oil futures, or options). If oil is $100 a barrel, and I'm pretty sure it's going to $150, it would be smart for me to buy as much as I can at $100, and store it. Or, buy options that I think will allow me to buy at any price less than what I predict it will go up to.

The reason most of the people who read this site think it's no big deal is that every time a commodity or option is sold, both buyer and seller think something different is going to happen. Just like betting on Alabama-Auburn football. You can't place an Alabama bet, unless someone else thinks Auburn is sure to win.

Essentially, a trader who sells a commodity or option, and one who is buying, are both secretly whispering "sucker" under their breath. The seller is glad he got it off his hands. The buyer thinks he got a sweet deal. With lots of people buying and selling options for increased and decreased prices, it all pretty much cancels out.

There's no way all those forces can be working in the same direction, because if everyone believed the same thing, there wouldn't be anyone willing to buy (or sell, whichever the case).

Hope that helps. There are plenty of online articles with simple explanations of stocks, commodities, options, futures. Hopefully this will give you an idea of the *debate* about the issue.

The average age of the U.S. passenger airline fleet is about 13 years, Ken. Northwest and American distort that industry average, with their aging DC-9's and MD-80's. But those aircraft have an outstanding safety record, and there is no reason for airline passengers to fear flying in them. U.S. passenger airlines collectively spend billions of dollars maintaining their fleets in top condition. Airline CEO's and CFO's fly constantly on those jets, and they are not going to jeopardize their own lives by skimping on maintenance.

For what it's worth, Southwest Airlines is still buying aircraft and still planning to replace its older 737 Classic jets with newer 737 NextGen aircraft. If flying older aircraft bothers you, Ken, then I suggest you fly Southwest and avoid American and Northwest.

So, oil prices are high because of speculation in oil futures? Are Boeings planes so expensive because of steel/alloy/aluminum futures too? Did you know you can also purchase derivatives on weather data/future forecasts too, does that mean that I could save the world from no more crop failures and everyone in the world will have full bellies? Man, the power of commodities!!