Tomorrow's gasoline at today's prices?

July 11, 2008 7:35:48 PM PDT
Everybody's talking about how to guard against rising gas prices. You can't really horde gasoline safely, but one company is offering a different way to do just that.

Do you know the term hedging? It means buying now in case prices go up later. There is a company that lets you do that with gasoline, but it's already running into problems.

As gas prices continue to soar, so do some jets. One airline that isn't feeling the pinch is Southwest. Why? Because Southwest Airlines bought its jet fuel years ago, when oil was much cheaper. Now that prices are up, Southwest is saving billions. So can motorists do the same?

"Oh God, it's a funny business, but it's no laughing matter," said Kenneth Kahn from Alameda.

"They will take $1,000 worth of gas right now at this price, six months from now it's going to be at least 50 cents higher," said driver David Lukaris from Sonoma.

The new company, MyGallons.com, says it can let you lock in today's prices to buy gas in the future.

"Well, if the gas keeps going up the way it's going up right now, I definitely think it'd be worth it," said Kymberly Hill from San Francisco.

MyGallons works like a debit card. You load it with gas at the current price, then fill up later at the same price.

"It'd be great if you had money sitting around to be able to buy futures in gas," said Kahn.

Lukaris says a fixed price is just what he needs. His fill-up reached a new high the other day -- $123.

"It just looks like it's going to go up and up and up and up," said Lukaris.

But is MyGallons the way to save? Consumer Action's Joe Ridout says probably not.

"This is one business of many we expect to see taking advantage of consumers' fears about rising gas prices," said Ridout.

He says MyGallons comes with a lot of risks.

"Basically what you're doing is making a bet that gas prices will continue to rise because if they fall you will be losing money," said Ridout.

And a lot of fees.

"You have to pay an initial fee of $30 to $40. The company does not disclose anywhere on its Web site what you will be paying for the gas," said Ridout.

MyGallons decides how much you'll pay for gas based on where you live. But it won't tell you the price until after you buy the card.

"There's no guarantee at all you'll be saving money because there's no indication exactly how they're setting their prices," said Ridout.

There's also a membership fee, a reloading fee, overdraft fees and fees for pumping high octane.

And less than a month after its launch in June, there was a major problem.

"This company claims you can use the card at 95 percent of gas stations to buy their gas, but in fact you can't use it anywhere in the country because no bank has signed on with them," said Ridout.

MyGallons says already, 7,000 people have signed up. But there's still no payment system to use the card.

MyGallons founder Steve Verona canceled an interview on Thursday with 7 On Your Side and could not be reached to comment.

But a statement on his Web site says the company is negotiating a contract for a payment system. He claims U.S. Bank pulled out of its agreement to provide the service, though U.S. Bank says there never was an agreement.

And Verona's statement says: "We look forward to being back on track and giving the American consumer the program they clearly desire."

A MyGallons spokesperson told 7 On Your Side on Friday it sets prices after you buy the card because prices fluctuate.

The company told the Better Business Bureau it has suspended new memberships until it sets up a system for people to use the card.


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