By Daniel Moore
The July 2008 launch of MyGallons.com, a website that allows motorists to secure future purchases of gasoline at current prices, could have gone smoother for founder and CEO Steven Verona.
U.S. Bancorp, a Minneapolis bank that Mr. Verona expected to ensure the credit of special MyGallons cards, pulled out unexpectedly. The bank, Mr. Verona alleges, then lied to the media and the Better Business Bureau about its involvement in the venture. The bureau — which grades businesses on trustworthiness — slapped MyGallons with an “F” rating for distributing false information to customers.
MyGallons reimbursed tens of thousands of customers who had already paid membership fees, and Mr. Verona put the endeavor on hold while he redesigned the service without a financial partner.
But the Miami-based company, which in 2013 won a defamation lawsuit against the bank, claims it has not only survived but is poised for record growth this month, as retail gas prices continue to rise.
The company expects to sign up about 38,000 new customers who are scrambling to buy fuel while pump prices still stand to rise significantly. Mr. Verona would not disclose the number of MyGallons customers, but he said this growth is on par with the customers it gained in 2009, when oil prices spiked.
“When prices are dropping, we encourage people to sign up,” Mr. Verona said. “When they go up significantly, people who bought much lower are using MyGallons to realize savings.”
The service doesn’t give consumers literal tanks of gasoline for storage. Rather, it allows them to pay for a certain virtual quantity of gas — limited at 150 gallons per vehicle per month — at the average retail price in their home state. Consumers can “cash in” these gallons at any time and receive a deposit in their bank account equal to the difference.
It works like this: If the price of gas were $2 a gallon, customers could pay $300 to purchase 150 gallons. They could then redeem those gallons at any gas station if prices were to hit $2.50, which would save them $75 when MyGallons deposits $375 in their bank account.
But that savings doesn’t account for service fees of $30 per vehicle for an annual membership, a 6 percent fee on the pre-purchase of gas and then another 6 cents per gallon as a quantity of gas is cashed in.
And with the volatility of oil prices, skeptics are concerned that most consumers don’t have the level of prowess needed to see significant benefit from such an arrangement.
MyGallons is what some call a “gamification” of what futures traders already do. That is, it allows ordinary consumers in on the speculation on the price of gas while not necessarily understanding the complexities of the marketplace.Read more