Service lets drivers lock in gasoline prices
NEW YORK (Reuters) - The high price of gasoline has some U.S. drivers looking to the future.
A recently introduced service called MyGallons.com allows drivers to fill up their tanks sometime in the future but at current prices, using a debit-like card which banks gallons rather than dollars.
"The price of gasoline was changing all the time. It seemed unpredictable," Steven Verona, founder and owner of the Miami-based company, said on Monday.
"It seemed there had to be a way to fix the price," he said.
Working on the assumption that the price of gasoline will continue to rise, Verona started about two and a half years ago to put together the company which gives the driver some measure of control of what he pays for gasoline.
Since a soft launch in January, about 2,000 people representing a cross-section of regions across the U.S. have signed up with MyGallons.com to be able to help them find ways to cope with the rapidly rising price of gasoline, Verona said.
On Monday, the average retail price for U.S. gasoline hit a new record of $4.10 a gallon, rising 1.6 cents over the last week and up $1.14 from a year ago, the U.S. government said.
And while the high price of gasoline has cut demand by about a percent from last year, the record high price of crude oil over $140 a barrel seems to ensure that prices will stay high.
Verona said that new customers generally begin by purchasing 25 to 50 gallons of gasoline.
"Once they are comfortable with how MyGallons work, they are buying 100 to 200 gallons at a time," Verona said.
Using regular unleaded gasoline as the benchmark, drivers pre-buy gasoline based on their zip code. MyGallons.com determines what that price is based using established providers of oil prices.
Drivers using premium gasoline or premium pay an additional price over benchmark regular gasoline for the higher-priced fuel.
At the pump, the driver swipes his MyGallons card like a debit card. MyGallons.com said that the card is accepted at over 95 percent of U.S. gas stations.
"We don't sell futures. It's prepurchased gas," said Verona, who said MyGallons.com uses a sophisticated hedging strategy to protect and meet obligations to members.
The risk to the consumer is if price of gasoline in the future becomes cheaper rather than more expensive. But if members are dissatisfied, they can drop out of the program and receive a lesser of the current price or what they paid as a refund.
"There is that risk that the price could fall significantly," said Verona.
"But I think that most people would agree that risk is pretty minimal. Overtime, it is going to go up even if there is no change in the supply/demand relationship because inflation alone would push the price up."
(Reporting by Janet McGurty; Editing by Marguerita Choy)
