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Priceline Pumps a Gas Program

Name-your-price gasoline will be offered in May, with or without the help of major oil companies.

By Kathleen Melymuka, Computerworld   

"We're certainly meeting with them, but we have nothing to report right now," says Robert Padgett, a spokesperson for Priceline WebHouse Club, the affiliate of Priceline.com that announced the program last week. "We could go ahead without them."

That's because most of the proposed consumer savings of 10 to 20 cents per gallon will be derived from ads on the gasoline page of the Priceline.com Web site. Priceline will also work with individual gasoline retailers, which it expects will agree to shave 1 to 3 cents per gallon off gas prices, where they make very little profit.

In return, gas retailers expect Priceline to drive additional customer traffic their way, presumably to spend more on food and other items that deliver the bulk of their profits.

Here's how the new gas deal works: Before the program launches in May, consumers can apply for a Priceline gas card on the Web site. The company then forwards a list of local gas stations and the consumer pre-approves three or more of them.

Once the program goes live, consumers will enter the site and name the per-gallon price they are willing to pay for self-service gas and the amount they wish to buy, at a minimum of 9 gallons and maximum of 50 gallons per month.

If Priceline can get that price from any of the preapproved stations, it charges the entire amount at that price to the consumer's credit or debit card. The consumer then takes his Priceline card to that station and pumps gas throughout the month regardless of the posted price since it has been prepaid.

The price of any prepaid gas that isn't pumped within 30 days is automatically refunded to the credit or debit card. If the pump price is ever lower than the prepaid price, the difference is credited.

The involvement of major oil companies such as Exxon Mobil will be gravy for a program that can fly without them, Padgett says. In any event, Wall Street is fairly certain top oil companies will participate. "I do believe (oil companies will get on board) and that several have already, even though details haven't been released," says Sara Farley, an analyst at PaineWebber in New York.

Farley says many retail stations are owned by the large oil companies, adding that "a lot (of oil companies) would be more than happy to cut a couple cents a gallon to get people into their gas station to buy lotto tickets and snacks."

The announcement of the program last week coincided with the highest gasoline prices in 10 years, and Priceline.com and Priceline WebHouse Club founder Jay S. Walker jumped all over the coincidence. "This is the perfect time for consumers to do something about the high cost of gas," he said.

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