Customers lock in gas prices at fuel bankby Ambar Espinoza, Minnesota Public Radio
A St. Cloud-based company is cashing in on consumer demand for a predictable gas price. First Fuel Banks allow customers to lock in the price of gas. Sometimes, that locked price is higher than the price at other gas stations. So the business recently added a new program that allows customers to pay the market price.
St. Cloud, Minn. — Glen Bartels is pouring gas into an underground storage tank at the headquarters of First Fuel Banks, where he works, in St. Cloud.
First Fuel Banks isn't the only one storing away gas; its customers can do that, too. For the past 27 years, customers have been able to deposit money into their accounts and lock in gas prices at that day's price.
"It's the only place in the world where you can buy it ahead, bank it for future use, and get out of the way of the markets," said Jim Feneis, president of First Fuel Banks.
Today, the locked-in price his customers pay is about $2.50 a gallon, sixty cents more than the price at the pump at competing gas stations. Feneis said some customers don't mind, because they like the predictability. He said they remember how high prices were last year, and locking in at $2.50 a gallon doesn't sound that bad.
"For example, the last couple of summers, last year when gasoline went to $4.00 plus and the summer before that when gas went to $3.00 plus per gallon, we had thousands of members saving per gallon," Feneis said.
But Feneis wanted to offer customers another option, so last fall, he started a program that allows customers to have what's called a "rolling" account, in addition to their locked in accounts. That means, customers can pay the market price for gas.
Marcela Edelbrock has both accounts, and she uses whichever one will get her the cheaper price.
"We can lock in the price and not have to worry about," Edelbrock said. "We kinda know and we can make the choice if it's lower than our locked in price is, we can go with the lower price, if it's up, we're safe, if it goes down, we're also safe."
Feneis has about 12,000 customers, and each day, about 300 of them deposit money into their accounts. About a one-fourth of those deposits are for locked-in prices.
And the bulk of Feneis' business comes from companies and government agencies that purchase 80 percent of his total volume of gas.
Geri Herges works for El-Jay Plumbing and Heating. She said the plumbing and heating company can't afford to buy in bulk anymore, but it uses First Fuel Banks for other reasons.
"They make many locations and it's one card that services all locations," Herges said. "So one truck needs one card and they are in and they are out, no contact with the public. You just put your card in and you're done and for us, that's convenient."
Back at the First Fuel Banks' headquarters, Jim Feneis said he constantly monitors the markets and buys more gas when prices are low. His inventories total a million gallons of gas, while an average gas station has an inventory of less than 25,000 gallons.
He also doesn't have to worry about overhead expenses the way a gas station with a convenience store does.
"We can do things with such a narrow profit margin because it's completely automated," Feneis said. "For example, if you're going to run a store 24 hours a day, you have one and possibly even two people on staff."
Feneis said he's seen an influx of business, because people are nervous about the fluctuating price of gas. As that price continues to bounce around, customers' demand for predictability isn't likely to go away.
- All Things Considered, 02/11/2009, 5:24 p.m.