Concept: Purchase a prepaid gas card for a specified number of gallons at a set price to hedge against future increases in gas prices (not currently live, but it’s a concept Gulf has announced and is working on)
Will You Save Money?: Yes**
Comments: As noted above, this gas saving opportunity is still in the working stages and has not been launched yet. The basic concept is similar to the Fuel Bank, but on a much smaller scale and will be limited to Gulf branded stations.
Instead of purchasing a pre-paid gas card for a certain dollar amount, you’ll purchase a pre-paid gas card for a certain number of gallons at a set price. When you purchase the pre-paid card, you’ll only $0.75 to $1 per gallon and then pay the rest of your locked price at the time of purchase no matter what price is listed at the gas station. If the prices rise, you pay the locked in price, if the prices fall, you pay the cheaper price. It’s not clear what would happen if prices fell to less than $1 a gallon, but I don’t think that the risk of that happening are very high.
What the card will allow you to do is budget your gas spending better on a monthly basis. If you have a locked in price and enough gallons of gas on the card to last you the month, you know exactly how much you will be paying and won’t be subject to any sudden, short-term price spikes.
While the Gulf locked price gas card can save you money if gas prices rise, and you are protected if gas prices fall, as with the Fuel Bank, there are a few considerations you need to think about that may make it appear that you are saving money when in reality you really wouldn’t be.
**Your locking in your money with a specific branded gas station. If this station’s prices are higher than competing brands, possible savings from future higher gas prices need to be weighed against higher prices compared to competing gas stations.
**You need to look at what the money you prepay for the gas would have earned you had you left it in the bank. While the pre-paid card would allow you to lock in a smaller amount of money than the Fuel Bank, you’ll also use up the set price faster since you likely won’t be purchasing quite as many. This will protect you against short term spikes in gas prices, but not in long term rises.
**If you make payment for the fixed price gulf pre-paid card by credit card, you need to have the funds in your savings to pay off the credit card. If you don’t have the savings to pay off the credit card payment when it comes due, the gas becomes a lot more expensive than the price you actually paid due to interest charges you’ll incur. if you save 10% on gas price increases, but are paying 18% on interest, you lose money even when it may appear you saved money on gas.