Gasoline bank pays off for handful of US drivers

[flashl]

NEW YORK, May 9 (Reuters) - U.S. gasoline prices may be marching toward record heights but you wouldn't know it by the handful of drivers in St. Cloud, Minnesota, filling up at less than $2 a gallon.

A unique bulk-buying scheme offered by First Fuel Banks, a company that runs six gasoline stations in St. Cloud, is allowing some of its members to pay bargain-basement prices for a fill-up while the rest of the nation swallows a 15 percent spike over the last two months.

The U.S. Department of Energy has called the jump in fuel costs ahead of the vacation season "a crisis" for American drivers, and many energy experts anticipate the average cost of gasoline will break last year's record over $3 within weeks.

And while the fuel price reprieve in St. Cloud could be viewed as a good model for the rest of the country, many U.S. fuel wholesalers say First Fuel Banks is taking on a huge risk that makes the scheme difficult to replicate.

First Fuel Banks allows motorists to buy an unlimited volume of gasoline and diesel at a fixed price via a club membership card, meaning drivers can buy big when they think prices are low to insulate themselves from a future spike.

Jim Feneis, chief executive officer of First Fuel Banks, said some of the company's 8,000 members are still using fuel they bought in bulk at below $2 a gallon.

The risk for drivers comes when they buy gasoline or diesel in bulk just before prices plunge, leaving them with fuel far more expensive than the going rate. For First Fuel Banks, the danger comes when they are unable to capitalize on a hike in market prices for the fuel it has already promised to members.

Reuters

[A HERETIC I AM]

1. Fuel Futures contracts for the average Joe.

As the article states though, it is not without risk, but if they bought at two bucks, they will probably be just fine. It's the fuel company that loses out on potentially higher profits on this deal.