(Source: Business Week)
Fuel up at a U.S. gas station, and you'll pay an average of $2.52 to $2.91 a gallon [depending on what part of the country you're in], according to the most recent Energy Information Administration figures. But starting July 1, drivers who buy most Hyundai models can get a special card they can use to fill their tanks at just $1.49 a gallon. The arrangement comes courtesy of a partnership the carmaker has made with Pricelock, a technology and risk management outfit based in Redwood City, Calif., that ran a similar offer for Chrysler in summer 2008. To learn about the particulars for consumers as well as for Pricelock, BusinessWeek's Rebecca Reisner recently spoke with Pricelock CEO Robert Fell. Edited excerpts of their conversation follow:
How long does the Hyundai offer last?
Through August and possible longer.
Does Hyundai set a limit on how much gas drivers can buy?
Yes, Hyundai is giving you the equivalent of enough gas to drive 12,000 miles in the model of the car you own. The average is approximately 600 gallons; 12,000 miles is the average miles per year the U.S. consumer drives.
Pricelock says the card will work at 93% of gas stations across the country. What about the remaining 7% -- are they clustered in any particular geographic areas?
No. The 7% is made up of gas stations that accept only cash and/or debit cards. Drivers can use the Pricelock card at virtually every gas station that accepts credit cards.
Your Web site says that Pricelock is the only company that "combines technology and commodities expertise to deliver price protection." What do you mean by the "technology" part?
The "technology" is that Pricelock is making it possible for drivers' own credit cards to be charged $1.49 a gallon when the gas station is charging more. For example, when the gas station is charging $3, our technology allows us to pay the gas station the $3 by collecting the money both from Hyundai and the customer, whose credit card we charge only $1.49.
Does Pricelock actually own the gas that drivers can get at $1.49 a gallon?
No. The whole idea of Pricelock is to provide price protection. We buy a hedge, which enables us to cap the price. In other words, if I was a big buyer of fuel and wanted to never pay more than $3 per gallon for the next year, I can buy a call option, which will protect us on the financial market. We've combined our financial experience with technology to enable Hyundai and other companies to make an offer of this type.
As far as this Hyundai promotion goes, how did you come up with the $1.49 figure?
We didn't. Hyundai did.
