Hedge vs. speculation - BIG difference.
Like you said, Southwest is hedging.
That’s not speculating - Southwest genuinely intends to buy, and use, fuel in the future (unlike speculators); hedging is a type of price protection. That’s what the futures market was designed for.
To say you want hedgers and not speculators is like saying you only want folks who want to buy stocks and not folks who want to sell them. Speculating is often just taking the other side of the trade that the hedgers take. What’s more is that even though you may say that SWA is “hedging” they are actually speculating too. And in effect, by not hedging, that too is a speculation.
To say “Hedging”=good, “Speculating”=bad is a gross oversimplification and not in keeping with how the futures markets were originally designed to operate.
If you buy a house to live in it are you hedging? If you buy a condo to rent it out are you speculating?
The bottom line is that it shoudn’t matter. What matters is that you don’t corner the market, or have insufficient capital, or front run client trades or things of that nature.
They're trying.
That’s not speculating - Southwest genuinely intends to buy, and use, fuel in the future
Southwest does not take delivery of the oil contracts they buy.
(unlike speculators); hedging is a type of price protection. That’s what the futures market was designed for.
So if I, like Southwest, want to protect myself against more expensive fuel in the future and buy an oil contract, I'm an evil speculator?