Gas Bank Is Like Money in the Tank

This holiday weekend, while some motorists are curtailing vacation plans because of high gas prices, Christine Blount is gleefully mapping out all the places she’ll go in her 1989 Bronco II.

The grocery store. Friends’ homes for a cup of coffee. Maybe all the way to Minneapolis, nearly 70 miles, to see a movie or do a little shopping -- despite the fact that her vehicle gets 12 miles to the gallon.

After all, Blount is paying only 89 cents a gallon for gas. It costs her just $20 to fill the tank.

Blount is one of 9,600 members of First Fuel Banks, a family-run business here where customers have been pre-buying gasoline in bulk on the commodities market for more than two decades. It is billed as the only company of its kind in the country; members use debit cards to pump gas at First Fuel’s six filling stations in the St. Cloud area and in nearby Monticello, Minn.

Nearly 300 of its customers pay less than $1 a gallon. Several thousand who bought into the system in the last few years are paying less than $2.

“All my friends thought I was crazy when I spent $500 on fuel back in 1999,” said Blount, a retired computer-store owner. “Now they’re calling me all the time, asking how they can get in on it.”

She calls this her “insane cheap” gas, and taps into the reserve only when she has to take a particularly long trip. Otherwise, she uses a secondary account she’s established that has hundreds of additional gallons, reserved at less than $2 a gallon.

“Whenever I have a couple hundred bucks free, I just add more gas to the account,” Blount said. “That way, I always have more than enough to keep me going. I’m never going to pay the prices you’re seeing these days.”

While gasoline prices have fallen slightly from their recent record highs, they remain far above last year’s levels. On Friday, the national average for self-serve regular was $2.862; the average in California was $3.352. A year ago, drivers were paying at least 75 cents less per gallon.

The price at the pump has many reconsidering how they plan to spend their holidays. Earlier this month, a survey by the Internet company MapQuest Inc. found that 72% of those polled said gas prices were going to affect whether they would take a road trip this summer -- and nearly 1 in 10 people expected to cancel or delay trips because of fuel costs.

Bryan Hansen is one such person. The salesman normally spends summer weekends at his family’s cabin in the woods outside Motley, Minn., about two hours north of here. Now, he said, he can afford to go only three times this season.

“We use First Fuel for the company fleet cars, and it always seemed like a good idea. But it never seemed important enough to do [personally] -- until now,” Hansen said as he filled his company’s pickup truck Thursday.

The idea of having consumers gamble on fuel futures as a way to cut costs is catching on. Gulf Oil, for example, plans to roll out a system to let consumers buy prepaid gas cards at set prices. The Massachusetts-based company has the franchised rights to more than 1,800 Gulf stations in the Northeast.

The idea for First Fuel came from Denis Feneis, who in 1963 began delivering heating fuel to families across this bustling town of more than 64,000 on the west bank of the Mississippi River. A few years later, trying to draw more sales, he set up a small, two-pump gas station.

“We were a family business, so you did what you could to help out your friends and neighbors,” said Dan J. Feneis, the company’s co-founder and Denis’ son. “That meant letting people owe you for the fuel if they couldn’t afford it, which meant our business would be tight on paying the bills too. Dad would always say, ‘I wish there was a way that we could convince people to pay for all the fuel they’d need up front. That way maybe we could figure out a way to make it cheaper for folks.’ ”

In 1982, Dan and his brother, Jim, expanded the family gas station. They also installed a computer system that allowed them to monitor how much gasoline was in each storage tank and how much a particular customer had pumped. Then the brothers began promoting the idea of a prepaid gas club.

Customers pay $1 to join First Fuel, and can lock in a price for future purchases.

The bank has accepted deposits for as little as $3 worth of gasoline, and as much as $400,000. The company can cover small advance purchases from the fuel it stores on site. For bigger deposits, it purchases fuel futures contracts on the New York Mercantile Exchange.

How much a customer pays is based on the market price for fuel on the day they buy in. They also pay fees to First Fuel to cover the cost of transporting the fuel to Minnesota and any additional taxes. The bank also gets a fee for brokering the sale and makes money off its regular retail customers as well.

“We provide the fuel for St. Cloud’s Police Department, the parks and recreation department, and several other city agencies,” said Jim Feneis, the company’s chief executive. “We also have dozens of retirees who only drive a couple hundred miles a year, going to and from the grocery store.”

Said Sgt. Jerry Edblad, spokesman for the St. Cloud Police Department: “We’ve been using it since the mid-1980s, and we get at least 13 cents less a gallon than we would elsewhere in town.” But, he added, “you don’t want to be too aggressive, because it is a speculation game.”

Blount began tracking Gulf Coast weather patterns and political turmoil in the Middle East to try to predict which direction gas prices would go and when she should buy more credits.

“My other car is a 1993 Cadillac, and it gets as much as 27 miles to the gallon -- if I drive that V-8 engine at 70 mph or faster. Otherwise, it’s more like 15 mpg,” Blount said. “Frankly, I’d rather avoid the speeding ticket and put money in my account.”

Ever since last summer’s devastating Gulf Coast hurricanes, business has been booming at First Fuel Banks.

“I had one woman come in here right after Hurricane Katrina with a $10,000 check, and insist that she had to buy gas,” said Sara Blaszak, a customer service worker. “I kept asking her, ‘Are you sure? It’s $3.27 a gallon. It’s going to drop some.’ But she wouldn’t budge. We’re expecting the same thing to happen this summer, when the hurricanes hit again.”

The bank’s six-person staff has been fielding hundreds of calls from consumers across the country eager to sign up. It doesn’t seem to matter that they’d have to come to central Minnesota to get their fuel.

On Thursday, office manager Danette Burlet’s phone rang constantly. Some calls were from customers, asking whether the status of levee repairs in New Orleans was driving up fuel prices on Wall Street.

Others were from would-be entrepreneurs from as far away as California and Hawaii, asking whether the company planned to expand beyond central Minnesota.

“Ma’am, I’m sorry, but we aren’t a franchise,” Burlet explained to one caller. “We’re a small business. I don’t see us setting up pumps in Texas.”