Three rolls of forever stamps please

Ashley Milne-Tyte May 3, 2006

KAI RYSSDAL: Imagine if you could pay for something today at a set price, and not have to worry about future price hikes. Investors do it every day. It’s called hedging. Today the Postal Service made two announcements: It wants to bump first-class postage to 42 cents. But you might be able to buy something called a forever stamp. Ashely Milne-Tyte has more.

ASHLEY MILNE-TYTE: The forever stamps will go on sale next spring. They’ll cost the same as a new first-class stamp: 42 cents. Shelly Dreyfus advocates for consumers at the Postal Rate Commission. She says the forever stamp is smarter than the 2-cent make-up stamps that frustrated consumers in January.

SHELLY DREYFUS: In some cases, the make-up stamps weren’t even available anymore, the Postal Pervice had sold out of them altogether. So the Postal Service had a lot of very irate customers. And in the future, if the public tends to buy forever stamps, they won’t have to face that anymore.

Instead, they’ll be hedging. Laurence White teaches economics at New York University. He says hedging is a time-honored way of dealing with price uncertainty. Airlines like Jet Blue hedge on fuel costs by agreeing to buy petroleum at a set price in the future. But, he says, if there were a sudden drop in prices . . .

LAURENCE WHITE: . . . Anyone who had contracted to receive jet fuel a year from now at a price in the vicinity of the $75-a-barrel equivalent would have made a loss.

The Postal Service says the cost of first-class stamps is likely to keep rising. Still, White says there are potential problems with buying up a load at once. Your stamps could get lost or stolen, or . . .

WHITE: Maybe the US Postal Service’s monopoly on first class mail might get eliminated.

Or e-mail might render first-class obsolete.

In New York, I’m Ashley Milne-Tyte for Marketplace.

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