When gas was approaching $5 a gallon this summer, the whole world seemed to revolve around finding ways to save money on gas. Seemingly every TV commercial marketed towards society’s angst for high gas prices. Since then, the cost of oil has been cut by more than two-thirds. Prices at the pump are cheaper than they’ve been in years. It didn’t take long for the oil bubble to burst. When it did, many victims were left in its wake:

Airlines that Hedged

Some airlines, most notably Southwest, were betting big that the price of oil would continue to climb. Historically, this strategy worked out well for Southwest. A vast majority of the companies profits in the past decade have been earned by appropriately hedging against increasing fuel costs. No airline has been as aggressive about hedging against the high price of oil than Southwest, so no airline took as much of a beating when prices plummeted this fall. Their hedging strategy backfired this fall when oil prices dipped well below the prices that Southwest had “locked in” to pay. This misstep cost the company it’s streak of 17 years of being in the black for every quarter.

Car-Buyers that Locked In to Higher Prices

Auto-dealers were doing anything they could to sell cars this past summer, including offering “fixed price” deals that allowed buyers to pay $2.99 for each gallon of gas they buy no matter the actual cost of fuel. When everyone thought that oil was headed to $10 a gallon, this strategy helped auto dealers to move cars off the lot. Now the people who took this fuel “savings” in place of some generic $2,000 discount look awfully foolish.

Bubble Chasing Investors

A common investing fallacy is when people wait to spot a trend and then hop on board. In the case of energy stocks, many people waited until they reached their peak in the summer before pouring their life savings into what they perceived to be a “sure thing”. This investment strategy bankrupts uninformed investors in almost every instance where there is a bubble. Before putting their money in the stock market, these people would have been wise to learn that past performance is not a sole indicator of future direction.

Ultra Fuel Efficient Vehicles

People were doing anything they could to save money at the pump this summer, including switching out their SUVs for ultra fuel efficient vehicles like the Smart car. The Smart car, essentially not more than a moped with a frame (it has a puny 70 horsepower!) offers drivers the chance to travel about 40 miles on one gallon of gas. These were selling like hot cakes in the summer. Owners who previously thought they were making a cunning purchase now look like fools driving around in what looks like something you’d give to an eight year-old for Christmas.

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