Correctly stated. Futures are nothing more than an agreement between two parties to trade a commodity at a set price at some future date. Those of us heating with oil are familiar with a "lock-in" price that our oil man offers prior to actual delivery (usually, as long as we buy 1000 gal. or something.) That, my friends, is a futures contract- I'll pay you X for Y commodity, but not till Z time. This shifts the risk of price changes from the buyer to the seller. Where futures get hairy is that this "contract" can be traded on a largely unregulated secondary exchange. So, if your oil carrier locked in X price for you on Z date, his income is based on that margin. This is not so big for Joe Blow HHO Deliveries, but imagine Joe is an airline burning 55 gallons a minute times several hundred jetliners, and you'll see why the fuel futures market is so huge- ANYONE can introduce themselves as an intermediary between you and Joe, more or less gambling that the price of HHO will move one way or another. THAT is the proverbial "speculator." This is only one of the reasons that the delivered price of HHO (or gasoline, for example) is so volatile. Another is that there's not a lot of margin in the product; a typical gas station makes more profit off the pack of smokes you bought while filling up than they did on the gas, but the gas was the loss-leader that got you there. Our demand for cheap gas did this, encouraging gas stations to move away from the mom-n-pop "service station" model to the multi-pump convenience store model. It often is frustrating to hear a person assign blame to "greedy oil companies" for fuel prices when in fact it was our own demand for fossil fuels that gave those companies a reason to exist.