Friday, August 15, 2008

Leave it to the World Wide Web to be the playground for a new-age spin on pumping gas. There’s even an element of gambling mixed in.

Two new Internet-based companies will soon offer a hedge against rising fuel prices by allowing you to buy as much gasoline or diesel fuel as you like at current prices — even though you might not actually be pumping the stuff until much later.

Here’s where the gambling comes in: you have to be willing to pay now, betting that gasoline will cost more next week, next month, or whenever you decide to use your pre-purchased gasoline “credit.”

The two new services promote a “hedge” against rising prices, sort of opposite of the way as Wall Street’s infamous hedge funds bet the price of some company stocks will go down.

MyGallons (www.MyGallons.com) and GasBankUSA (www.gasbankusa.com) say their fixed-price programs protect you from rising fuel prices: you pay today’s price for gasoline and if it actually costs more when you pump it, then you’ve saved money. Say you purchase $100 worth of gas when prices are $4 per gallon and the price climbs to $5. You save a buck per gallon for as long as that $100 lasts.



Both services effectively operate with the same process: register at their Web sites and get a debit-like card that “stores” gasoline purchased at today’s price. However, the way that price is determined by the sites is a bit different.

MyGallons bases the price on that day’s average cost of a gallon in the zip code of your billing address. GasBankUSA uses the AAA’s national daily average. Both companies say their debit-type cards are good at 95 percent of the nation’s fuel stations.

Like anything promising to save you money, though, it’s advisable to read the fine print, particularly when it comes to fees. GasBankUSA says there’s a “small transaction fee” when you charge up your card. MyGallons demands annual memberships: an auto-refill card costs $29.95 and a card you recharge at will costs $39.95 annually.

Those fees are one cost of “hedging” on the price of gasoline. The other, of course, is the possibility that after you’ve advance-purchased fuel at $4 per gallon and the price goes down you will have lost money.

GasBankUSA has individual, family and fleet memberships, and both services’ Web sites offer intelligent tracking and reporting functions, not to mention e-mail/text alert options to detail account status and activity.

As of July 1, GasBankUSA said its Web site was populated with information about how it all works, but the service is not expected to be available until the fourth quarter of 2008.

A check at the MyGallons Web site indicates its service also has yet to go live; the company says it’s waiting for a new processor. So they’re promising a 50-percent discount on that $39.95 annual fee if you sign up now.

If and when either of the services gets underway, I’ll hedge and buy a card to experiment with the possibilities. The price of gasoline and diesel already are gut-wrenching enough and I really don’t need the extra tension of constantly worrying about whether I pre-bought my fuel at a smart price, and so this is a gamble for me. I think I’d stay away from any auto-refill option: if the price of fuel begins to drastically recede, it wouldn’t be wise to be automatically buying at fixed intervals.

Nonetheless, the notion of hedging against rising fuel prices is intriguing with the prospect of saving money if prices keep rising. Some may enjoy the thrill of “gambling.”

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