Today's high gas prices are already forcing changes in the way many consumers live, but it's a pretty safe bet they won't look so bad in a year or two. A new service from MyGallons.com lets consumers prepurchase gas and lock in today's gas prices for the future.
Consumers who sign up for a MyGallons Card begin by paying an annual membership fee of USD 29.95. Up to three cards can be linked to one account, and the membership fee is backed by a 100 percent money-back guarantee if the consumer doesn't save money on at least one redemption during the year. Members can then monitor their current MyGallons price—a fluctuating quote that's good for purchase of unleaded gas at a particular point in time, including estimated local taxes—and prepurchase gas when they deem the price worth locking in. Purchasing gas is simply a matter of visiting a participating gas station, where the MyGallons Card is accepted much like a debit card, complete with four-digit PIN. The number of gallons pumped is deducted from the consumer's MyGallons account balance, with adjustments automatically made for more expensive grades or types of fuel and price differences caused by tax discrepancies or other local variations. If the consumer pumps fuel from a filling station for less than the lower end of the MyGallons range on that day, he or she will receive a credit, in gallons, to his or her account.
More than 80 percent of the prepurchase money consumers spend through MyGallons is placed in an escrow account and invested in money markets and US government-backed notes; the remainder is used for financial transactions to accommodate gasoline price changes, MyGallons says. There are no time limits on using the prepurchased gas, so consumers can save it for as long as they want, provided they maintain their MyGallons membership.
After a pilot program beginning in April, MyGallons.com just recently underwent a public launch. Due to an unexpected, last-minute pull-out by US Bank, it is in the process of negotiating with other payment networks to allow the MyGallons Card to be accepted at most stations in the US that already accept credit cards. Nevertheless, the service promises to be a taste of what's to come.
Website: www.mygallons.com
Contact: www.mygallons.com/contact_us.html
Spotted by: Ozgur Alaz
http://consumerist.com/tag/mygallons/
The BBB says its concerned about gasoline-hedging company MyGallons.com and its ability to live up to the advertising claims on its website. A spokesperson for the BBB tells us that the biggest "red flag" they've discovered is that MyGallons claimed (in their press release) to have partnered with US Bank. However, when the BBB called US Bank to confirm this, they found out that it wasn't true. US Bank had discussed the opportunity with MyGallons, but had declined. According to the BBB, despite the fact that they have no contractual agreements in place to process transactions, MyGallons is still signing up new customers.
Gasoline seller MyGallons.com gets 'F' from Better Business Bureau
http://www.latimes.com/business/la-fi-mygallons4-2008jul04,0,5410778.story
There are also "hidden fees". At the very bottom of their site, which effectively cuts significantly into your savings: "*Cost of annual membership is $29.95 if you enroll in the auto-refill program. Cost of annual membership is $39.95 if you enroll in the manual refill program."
I posted about this idea on April 3, 2006 in a post called 'Steal this idea: Buying Futures of Gasoline -- http://www.boxcarmarketing.com/blog/item/steal-this-idea-buying-futures-of-gasoline/
Looks like someone finally has stolen it!
And I can't vouch for the reliability of their service, but it's a pretty interesting market opportunity.
Interesting idea but the business model seems simply wrong or misleading at least.
The business is based on the assumption that gas prices will rise, which means when their client purchase gas they have to provide cash for the difference.
The 30$ fee will be quickly used as for a regular individual who drives around 15000 miles per year, a 10c gas price increase over the year will increase the yearly bill of around 48$.
And if the gas price goes down, well the card simply has no reason to exist.
So, if they don't make money on the membership fee, they'll only make profit, if that, on the membership fees cash they invest in money markets and in us govt-backed notes.
So it seems these guys are basically in the investment business. Why bother set up a prepaid gas card business then?