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

http://blog.wired.com/cars/2008/05/will-chryslers.html

Begs the question, right? So does Chrysler just pour tons of capital into investing in Gasoline producers, hedging their bets too?

If gas goes up, investment goes up (not liquid albeit - the equity; not the commodity;)) the profits pay for the gas their subsidizing.

All of a sudden, GM and Ford see it as a successful business approach, they in turn do the same, all of sudden, fuel prices are being subsidized so they can keep volume flowing. Hmmm???

[quote]Will Chrysler's "Refuel America" Spur Gas Hedging?
By Matthew Phenix EmailMay 12, 2008 | 11:04:54 AMCategories: Business, Fuel Economy
Dg008_012ca_2 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.

The idea of a consumer-level fuel hedge isn't new to residential utility providers, which have for some time offered a form of price protection to homeowners, who can choose to divide anticipated annual expenses into equal monthly payments, rather than enduring seasonal spikes in their bills.

Such an idea could extend to gasoline or diesel purchases, allowing consumers to prepay for a set number of gallons at a predetermined future price. If the price is up when the contract matures, the consumer is covered. If it's below the "strike" price, well, c'est la vie. You lose.

Users could also pay a per-gallon "insurance premium," again based on a futures-style index price. The buyer agrees on a certain price for a certain date, and pays a small per-gallon fee for the insurance. This time, if the price falls below the strike

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

This is just a fancy way of saying rebate. All other sales incentives are removed so the gas they owe will never exceed what they would have spent with other fooers.
A smart gimick from Dodge.... But just a gimick

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

Yep just like saying choose 1.9% financing or $1,000 cash back, or $1,000 off, or cheap gas for 3 years. Do the math and all these programs end up offering pretty much the same savings, just in different ways.

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

Yeah, but everyone is so sensitive to Gas now, hearing it, and front loading the handling of that objection before you even start closing, really is clever, get's that obstacle out of the way...

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

yes... i think it is a great gimmick.. i already did the math the first 15 seconds i heard the commercial... 12,000 miles divided by 20mpg = 600 gallons of gas.... times lets say a savings of $1 per gallon... that is $600 per year for 3 years = $1,800 in savings... but it is nice to know your gas cost well never go above $3 a gallon. (for 3 years at least).... sorry, the CPA in me won't let me not calculate anything i can.

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

Now lets take it a step farther.... Like what if dodge buys futures in oil to back this? Oil goes up and they make money, oil goes down and the bet is covered.

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

Yes it's a gimmick; however, I doubt that it will hurt the resale value unlike normal rebates. As stated before, it has a great psychology behind it as people are sensitive to fuel costs.

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

That is what they need... thinking inside the box. Gas= problem. $3.00 gas for three years= solution. At least to most of us who think really shallow. Looks good and sounds even better. Nice gimmick;)

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

Another nice bonus to this is it makes them seem to care and when they have to go to see Congress next they can brag about this program when they are asked what they have done to help with keeping fuel costs down to their consumers. This program would work better of course if they had a true economy car on the market.