The idea that the founders of Mygallons.com have is an interesting one to read and think about, but I believe it's going to have a lot of problems as it gets going.
First of all, what Mygallons.com does is allow you to buy gas at the price it is today, effectively saving money if prices continue to rise. If they fall, you either have to hold on to the gas at the pre-purchased price until prices go back up, or use the card you get to buy gas at a more expensive rate than it is.
This is another way of saying you're basically buying gas like futures. One big positive, is if gas prices do indeed continue to rise, you are allowed to acquire as much gas at a time as you want, offering a tremendous opportunity for savings.
There is a $29.95 annual membership fee people have to pay, as well as another $15 overdraft fee if you go over your prepaid balance. The annual membership fee goes up to $39.95 if you want to put funds in at your own pace. The $29.95 membership fee covers those who choose to auto-refill their card.
One other fee is $1.95 every time you reload the MyGallons card with your credit card. That seems to suggest they're trying to get people to buy in larger allotments.
The company claims you can use the card at 95 percent of gas stations in the U.S.; the only country is services at this time.
According to the company, they encourage users to wait to use your card as prices go up, because many of their customers use it all the time, which decreases its value. They also encourage customers to buy when prices go down, to ensure solid savings over the season ahead.
Will this work? I think it'll be difficult to sustain over a period of time.
When reading their FAQs, there are so many variables involved, that it will eventually lead to a customer service nightmare. Just wait until the overdraft fees start kicking in or the card is declined. That will create an enormous amount of bad will, along with burnout from those servicing the customers.
But what will probably be extremely difficult is if the buying habits of consumers change at all while using the service.
When you take a trip for example, the adjustments made by the company will probably drive the customer crazy. As the company says, they assume when you buy the gas on the card, that you'll be driving the car in local conditions. If you go out of state, or taxes anywhere differ, they adust the number of gallons you can buy, based on that data.
If you think balancing your checkbook is difficult, wait till you attempt to figure out all the variables involved with one long trip crossing several state lines. There could be even tax changes from city to city.
Is there any value in this? There could be if you use the car for local driving, drive a lot, and have a vehicle that guzzles a lot of gas. If it is kept in those parameters, it could offer some benefit to the driver, as it wouldn't take long for a low-mileage vehicle to pay for the annual and reload fees.
From a business model standpoint, it's difficult to see this being a long term success. It's predicated on the assumption of continuing gas price increases. What happens if gas prices level off or drop? Customers are offered a refund for unused gas, so they're covered, but the company won't make money when things stabilize. The annual fee won't make it profitable, nor the card reload fee.
This sounds more like an early adopter type of business that will always remain solely for early adopters. People that don't mind spending a lot of time managing the use of the card could probably benefit. But if time is important to people, the potential savings probably don't make it worth the effort of professionals or busy people.
The numerous variables and resultant customer service nightmares will make it difficult to sustain over a period of time.
Customers with their act together and drive a lot could benefit from the business, but it would need to be contained to local driving. If that's done, it could be worth the time and effort. If not, I would definitely pass on it. This is more like investing than it is about savings.
Would you buy the card in hopes of saving gas money in the future?
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Mygallons.com Web site May Help Save Gas Money for Drivers
MyGallons.com Locks in Gas Prices
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