Most Americans felt the burn of volatile gas prices over the past year, especially last summer. For those people who use their car frequently for work or vacation, spikes in the cost of gas can be frustrating and costly. And as more people forgo expensive vacations for budget-friendly road trips this summer, gas prices will once again come into focus, especially considering the predictable rise of gas prices during the summer.
Ever wish you could hedge gas prices like big companies do? Startup Petrofix will let you do just that. It just launched an online service that aims to control gas prices for individuals and small businesses, by locking in a fixed price for gas so drivers don’t have to incur the extra costs when the price at the pump goes up.
Here’s how it works. Consumers can sign up for a plan ranging from 3 months to 2 years. To enroll in a plan, you pay a fee, which is based on where you live and your personal gas consumption. Petrofix provides you with online tools to help estimate how much gas you use in a given month. So for the West Coast, where gas is more expensive, you pay $42 for 3 months if you use about 50 gallons per month, which comes out to be around $0.28 per gallon. If gas prices go up, the company will cut you a check or refund at the end of each month for the increase in price from the time you locked in the gas price. In this scenario, you only come out ahead after the fee if gas prices rise more than $0.84 per gallon. But if gas prices keep going up, you save more (see this hypothetical example).
The other catch is that if gas prices go down (which they often do) then you are locked into a plan that requires you to pay for something you don’t necessarily need. But for those individuals and small businesses who are constantly on the road and rack up the miles, the service may not be such a bad investment considering the volatility of the market. And if you can lock in prices when they are still low, the hedge should work. Just don’t wait until July when gas prices are above $4.00 a gallon.