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Does it mean:
a. something that makes it difficult for oil to reach peak demand?
b. a way to protect money from being lost because of peak oil demand? (like definition 2 in the definition of hedge from Oxford Advanced Learner's Dictionary)

Seeing the writing on the wall, some oil companies are not sitting idle. Royal Dutch Shell, one of the largest oil and gas companies in the world, just decided to purchase NewMotion, a Dutch provider of EV recharging stations. The acquisition of the largest EV recharging station owner in Europe is clearly a hedge against peak oil demand. Shell also said that it would install EV recharging equipment at tens of thousands of its retail gasoline stations. Reuters reports that BP has also been in talks with EV recharging providers about installing equipment at their retail refueling stations.

Source: One factor that could crash oil prices

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  • What do you mean by a product "reaching" demand?
    – TimR
    Oct 20, 2017 at 11:13
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    Buying EV charging stations can be understood as a hedge against oil demand peaking, that is, reaching its apex and not getting any higher.
    – TimR
    Oct 20, 2017 at 11:14

1 Answer 1

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A hedge in finance is an investment that will grow if your other investments drop. So, buying EV charging stations for electric cars as a hedge against oil demand means that the company thinks that as gas prices go up (because high demand for oil makes it more expensive), more people will look for alternatives and will need recharging stations for their electric vehicles.

The charging stations ensure that even if there is less profit in selling gas, the company will make up the losses by selling electric recharging. So, they are a hedge against peak oil demand/high gas prices.

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  • But when gas prices go up, Shell can also make a lot of money. So is it paradoxical?
    – haile
    Oct 20, 2017 at 11:20
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    @haile That's really an economics question. People buy less of expensive things. So, Shell has to raise their gas prices because it costs them more to buy oil, but some people will start using less gas because they can't afford the new higher price. Some people will even buy electric cars because the extra cost of the car is offset by the amount of money they save on expensive gas. Shell may make more money but less profit.
    – ColleenV
    Oct 20, 2017 at 11:23

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