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Gas Peek!! Chrysler hedges Gas Price

The 'Refuel America' Campaign by Chrysler The 'Refuel America' Campaign by Chrysler Fuel Price Comparison between America and South Africa Fuel Price Comparison between America and South Africa
Date: 30 May 2008

Will Chrysler's "Refuel America" Spur Gas Hedging?

One person's adversity is another's opportunity. Take a look at the influx of foreclosure tours real estate agents carting busloads of bargain-hunters from one bank-repo'd home to another. Now, it seems spiking fuel costs are prompting talk of another sort of silver-lining venture: the gas hedge.

As we reported last week, Chrysler's "Let's Refuel America" incentive program has prompted more than its share of commentary (most of it deeply skeptical). But it does make us wonder: Beyond its implications for Chrysler, does the plan foretell a future for gasoline hedging on a consumer level.

For "Let's Refuel America," buyers of most new Chrysler, Jeep and Dodge vehicles can by gasoline, E85, or diesel at a capped price of $2.99/gallon for the next three years.

Okay, it's not nearly that simple. There are mileage restrictions (12,000 a year, based on the EPA fuel-economy ratings for your vehicle), and price premiums for fuel grades above 87 octane ($.15/gallon for mid-grade, $.30/gallon for premium), and you can only buy the type of fuel used by the car you purchased (or pay full pump price plus a $2 transaction fee). And there are a handful of models that aren't eligible for the program at all (the Dodge Caliber SRT-4 we're sampling this week, pictured above, is one that didn't make the cut, along with all other SRT vehicles; the Dodge Viper, Challenger, Sprinter van, and Ram Chassis Cab; the Jeep Wrangler and Wrangler Unlimited; and the Chrysler Crossfire).

General Motors tried a similar incentive plan a couple of years ago, offering buyers of certain sport-utility vehicles and sedans in Florida and California a $1.99/gallon price cap on fuel purchases. It, too, was met with skepticism, and the fact that the program wasn't broadened to national availability suggests it produced less-than-monumental results for dealers.

But corporate incentivizing is one thing; consumer-level price insurance on fuel is another. Can it work?

Chrysler's plan is simple manufacturer-level subsidizing, ultimately no different than cash-back offers or low-rate financing deals. Buy a car, and company swallows a portion of its purchase price or operating cost. The program is "powered" by a Texas-based upstart company called Pricelock, which claims to offer fleet operators a way to even out their fuel expenses and simplify accounting. The Chrysler incentive is Pricelock's first (and so far only) automaker alliance.

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