Bob McCarty Writes

A South Florida company is poised to take fuel hedging to the mainstream by enabling consumers to purchase fuel in a manner similar to that used by Southwest Airlines.

Southwest has set itself apart from other airlines by hedging on fuel prices (i.e., purchasing fuel via long-term contracts that lock in prices), a practice that, according to this Washington Post article, has allowed the discount carrier to stay in the black for 33 consecutive years.

Now, it appears GasBankUSA™ will attempt to replicate the airline’s success for the benefit of those whose primary form of transportation remains grounded at all time.

On its web site, GasBankUSA™ describes itself as “a membership based web site using a subscription model, the first of its kind that allows consumers, businesses, fleets, and over the road truckers to lock in a fixed price for gasoline and diesel.”

Here’s how the process will work, according to the company website:

1. An individual receives his GasBankUSA™ Fuel Card after he signs up and has his membership fee processed;

2. As a member, he purchase gallons at the current GasBankUSA™ price;

3. After the purchase clears, the gallons are deposited into his member account;

4. A member can go to any participating location — including most of the nation’s gas stations — and they can use their GasBankUSA Fuel Card™ to pump up to the number of gallons in their account; and

5. After filling up, the member’s account will be updated to reflect the withdrawal of the number of gallons pumped and a small transaction fee will be added to the cost of the transaction.

While it appears simple enough, the success of this effort will depend largely upon two factors: (1) Whether the company’s back office can indeed support it in a satisfactory manner; and (2) whether the company can establish and maintain a reliable relationship with a reliable nationwide credit card processor.

“One company’s already hit a snag, and paying ahead is always a gamble,” according to a NY Daily News article yesterday. An excerpt from that article appears below:

MyGallons.com, which debuted a service last week aimed at helping members save money by pre-purchasing gas on a debit-like card, still doesn’t have a deal with a company to process its transactions at the pump.

“MyGallons is negotiating with multiple competing national payment networks and expects to have an announcement shortly,” said CEO and founder Steven Verona. He vowed that members will soon be able to use the card at most service stations, or they can cancel and receive a full refund.”

The launch of the GasBankUSA Fuel Card™ is set for the fourth quarter of 2008.

More to come on this one, I’m sure. Here’s hoping the concept works.

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UPDATE #1 7/8/08 at 3:30 p.m. (Central): I spoke via telephone with GasBankUSA™ spokesperson Jonathan Paul this afternoon, several hours after publishing the post above. When asked what sets his company apart from MyGallons.com, he highlighted several fundamental differences, the most critical being that his company is targeting more markets, ranging from individual consumers who purchase fuel for small numbers of vehicles to commercial entities with demand generated by large numbers of vehicles. In addition, he said his company uses the AAA national average price for a gallon of gasoline as a benchmark while MyGallons.com pricing, according to its web site, depends upon the current average price of self-serve regular unleaded gas in your home area.

UPDATE #2 7/8/08 at 3:30 p.m. (Central): Atop the MyGallons.com web site this afternoon, I found this item which leads me to question the validity of the NY Daily News article referenced above:

Dear Members, There have been rumors and false reports circulating in the media and on the Internet in regard to MyGallons. I would like to set the record straight. The MyGallons pilot program began in April of 2008 and was conducted by Zenacon LLC before the new MyGallons LLC began operations. GoGas Universal notified us that the bank approved our application to provide payment network services through the Voyager Network, a wholly owned subsidiary of US Bank. Not only did MyGallons receive assurances…. Click here to read more.