*Very* interesting. But still only a patch solution, IMO.
Udhay
http://www.charlotte.com/mld/charlotte/business/14524333.htm
Posted on Sun, May. 07, 2006
First Fuel Banks locks in today's rates
GREGG AAMOT
Associated Press
ST. CLOUD, Minn. - Most motorists are feeling the pain as gasoline
creeps toward, or over, $3 a gallon - but not Art Altrichter.
"This feels pretty good!" Altrichter said as he filled the tank of
his Ford F-150 pickup for $2.03 a gallon on Thursday, when the
average here was $2.73. "Right now, to be a few pennies over $2, when
it's as high as it is? That's a real deal."
A year ago, the retired milk truck driver bought 500 gallons of gas
at First Fuel Banks, locking it in at the then-current price of $2.03
a gallon. He taps that reserve whenever gas rises above that mark. If
the retail price drops below $2.03, he can leave his reserve alone
and buy elsewhere.
First Fuel Banks bills itself as the only retailer in the country
where customers can buy gasoline for the future and hedge against
rising prices. It advertises no service charge and no storage charge,
just a $1 lifetime membership fee.
Altrichter said one of his neighbors got in at First Fuel Banks
several years ago and is now is withdrawing from a reserve that cost
him 99 cents a gallon. "How about that!" he said.
Both people and businesses buy gas from the company, which has six
stations in and around this central Minnesota city. The city of St.
Cloud fills its fleet of cars at the company's stations.
The program is open to anyone who drives off the street. Customers
buy whatever amount they want at the current price - the most ever
purchased in advance was $400,000 worth - then swipe a card and key
in a PIN number when they draw from their reserve.
Chief executive Jim Feneis, who runs the company with his brother,
Dan Feneis, said 300 of its members are still filling up with gas
that cost them less than a buck a gallon as recently as 2002. Many
more are locked in under $2.
"We're offering a pretty attractive concept to the savvy buyer," Feneis said.
Each station has a 50,000-gallon tank for each grade of gasoline -
regular, mid-grade and premium - compared with 6,000 to 8,000 gallons
for each product at a typical convenience store, Feneis said.
That's enough capacity to handle short-and medium-term demand, he
said. For people holding onto reserves for a year or longer, the
company hedges its obligations by buying gasoline futures contracts
on the New York Mercantile Exchange.
First Fuel Banks started with a single station in 1982 and now has
about 8,000 members, Feneis said. It makes its money just by selling
gasoline, diesel and some specialty fuels since its stations aren't
convenience stores. He said it has less than 5 percent of the St.
Cloud area market. But he said it's just one part of a larger
business, East Side Oil Co., that has other divisions such as oil recycling.
"Our 43-year-old family fuel business is happy, healthy and
completely debt-free," Feneis said. "And I think we're definitely the
minority."
A few other stations in the country have tried a similar approach,
but none have succeeded, he said.
Lance Klatt, executive director of the Minnesota Service Station and
Convenience Store Association, can understand why: price volatility and risk.
"There's no margins anyway" in the gasoline business, said Klatt.
It was a new idea to Ron Planting, an economist with the American
Petroleum Institute in Washington. "But in the Northeast and maybe
elsewhere there are heating oil dealers that do something similar
with a customer who wants to lock in a price for the current heating
season," he said.
Sheila Hallerman learned about First Fuel Banks when she received a
gift card a year ago, and a few months ago she bought 100 gallons at $2.40.
"It still hurts," she said of shelling out more than $2 for a gallon.
"But not as much as it could."
---
Associated Press Writer Steve Karnowski contributed to this story
from Minneapolis.
ON THE NET
First Fuel Banks: http://www.firstfuelbank.com/
--
((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))
