Patent ID: 7647282

Claim:
A method, implemented at least in part by a computer, for reducing a risk associated with a commodity, the method comprising: offering to supply the commodity to a commodity consumer, wherein the offer includes: an obligation to supply a first quantity of the commodity at a first price (P 1 ) during a first period of time; an obligation to supply a second quantity of the commodity at a second price (P 2 ) during a second period of time, wherein the second price (P 2 ) is within a first price band defined by a first price band minimum price and a first price band maximum price, wherein the first price band minimum price is based on a first scale factor (α 1 ) times the first price (P 1 ) and the first price band maximum price is based on a second scale factor (α 2 ) times the first price (P 1 ), where α 1 <1<α 2 ; an obligation to supply a third quantity of the commodity at a third price (P 3 ) during a third period of time, wherein the third price (P 3 ) is within a second price band defined by a second price band minimum price and a second price band maximum price, wherein the second price band minimum price is based on a third scale factor (α 3 ) times the second price (P 2 ) and the second price band maximum price is based on a fourth scale factor (α 4 ) times the second price (P 2 ), where α 3 <1<α 4 ; and determining, by a computer that executes instructions stored on a computer readable memory device, the second price (P 2 ) based on the first price band and a market price for the commodity at the start of the second period, wherein the second price P 2 is set to a price based on a product of the first price (P 1 ), a first benchmark price ratio, and a first inflation factor when the product of the first price (P 1 ), the first benchmark price ratio, and the first inflation factor is greater than the first price band minimum price and less than the first price band maximum price, wherein the first benchmark price ratio is based on a ratio of a benchmark price for the commodity for the second time period to a benchmark price for the commodity for the first time period.