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Fuel banks-good idea

alledanalledan Member Posts: 19,541
edited May 2006 in General Discussion
ST. CLOUD, Minn. (AP) - 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.fircool itelbank.com/

Comments

  • kristovkristov Member Posts: 6,633
    edited November -1
    While this is a workable idea, keep in mind that it is nothing more than small scale speculating in gasoline futures, an area which has been under fire for driving up fuel prices. I see nothing wrong with this but others have not been so understanding.
  • select-fireselect-fire Member Posts: 69,522 ✭✭✭✭
    edited November -1
    Yep, great idea. I would buy a 3 year supply minimum if it were available here.
  • WarbirdsWarbirds Member Posts: 16,936 ✭✭✭✭
    edited November -1
    Southwest Airlines put together a very similar contract with one of the big oil companies in a 7 Billion dollar deal where they locked in oil prices at $35 a barrel. At the time they were cought hell for betting the farm on oil prices. Well six of the seven major airlines are operating under Bankruptcy protection laws. Guess who is not in the red?
  • RexApplegateRexApplegate Member Posts: 4 ✭✭
    edited November -1
    My similar idea is that next winter, I could buy a thousand gallons of gas if the price goes below 2 bucks a gallon, and store it in drums in my garage.
  • KSUmarksmanKSUmarksman Member Posts: 10,705 ✭✭✭
    edited November -1
    just make sure your drums are in good conditions and quite tight, or kaboom!
  • MossbergboogieMossbergboogie Member Posts: 12,211
    edited November -1
    Dont really see thats solving a larger problem 2.00 dollars is still more than 1.00. And the problem is ever approaching less and less oil available. We need to get into something new if we are ever to see low fuel prices ever again. Something that oil companies have nothing to do with.
  • n/an/a Member Posts: 168,427
    edited November -1
    I considered getting a fuel tank installed here and buying when prices were low, back when the gas prices first started going through the roof...probably should have done it. Problem is, 200-500 gallons would not last me all that long.
  • Warpig883Warpig883 Member Posts: 6,459
    edited November -1
    It would be interesting to to a time value of money comparison between the net change in fuel price/consumer savings vs the average return if the money were invested in the stock market over the same period. I imagine the amount the consumers save is not as significant as they think.
  • HappyNanoqHappyNanoq Member Posts: 12,023
    edited November -1
    Only problem is, fuel goes bad in time.

    Gasoline somehow "looses it will to live".. I don't know if you experience it, but if you've had a chainsaw, weedcutter or gardentractor and it's just been sitting there for a year or two - the durn gasoline won't ignite properly in the engine.


    Also be sure you don't have water in your diesel - or a malicious kind of bacteria can form in the diesel under extended periods of storage. It's something called Diesel Plague (sp?? I think it's right).
    But it's a bacteria that makes the diesel go slimy..

    So if you're going to store it - be sure you store it RIGHT !!
  • KSUmarksmanKSUmarksman Member Posts: 10,705 ✭✭✭
    edited November -1
    quote:Originally posted by Warpig883
    It would be interesting to to a time value of money comparison between the net change in fuel price/consumer savings vs the average return if the money were invested in the stock market over the same period. I imagine the amount the consumers save is not as significant as they think.


    well, if you managed to lock in prices this winter at $2.00/gal (which they were in my area for about a week) and use it when the prices are near $3.00/gal (almost that in my area) that's like a 30% return in a matter of 4/5 months. Of course there are the inherent risks of any such speculation, for instance the speculative oil bubble may burst and we may see a decrease in prices, in which case you're SOL with a crapload of expensive gas.
  • 11BravoCrunchie11BravoCrunchie Member Posts: 33,423 ✭✭
    edited November -1
    I'm just going to build an ethanol stil and convert my truck over...it'll work just fine for me.
  • JamesRKJamesRK Member Posts: 25,670 ✭✭✭
    edited November -1
    Good idea.
    The road to hell is paved with COMPROMISE.
  • Warpig883Warpig883 Member Posts: 6,459
    edited November -1
    quote:Originally posted by KSUmarksman
    quote:Originally posted by Warpig883
    It would be interesting to to a time value of money comparison between the net change in fuel price/consumer savings vs the average return if the money were invested in the stock market over the same period. I imagine the amount the consumers save is not as significant as they think.


    well, if you managed to lock in prices this winter at $2.00/gal (which they were in my area for about a week) and use it when the prices are near $3.00/gal (almost that in my area) that's like a 30% return in a matter of 4/5 months. Of course there are the inherent risks of any such speculation, for instance the speculative oil bubble may burst and we may see a decrease in prices, in which case you're SOL with a crapload of expensive gas.


    (3-2)/2= .5 or a 50% return for the situation you explained. Such a return is a no brainer. Hell-sign me up. The long range return as compared to the same amount invested in the stock market is what I am interested in, the future will tell. It is those bursts of the bubble that kill a guy-although the 100 year return of the stock market is way positive.
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