Priceline.com to Put Gas Up for Bid on Web

Name your own price--and pump.

Priceline.com, the Internet shopping service that brought consumers pick-a-price discounts on airline tickets, hotel rooms and other items--not to mention actor William Shatner crooning through those campy television ads--is branching out into gasoline, the Stamford, Conn.-based company said Friday.

With oil and gasoline prices cruising in record territory, consumers will be able to bid to buy as much as 50 gallons of gasoline a month starting May 20 from designated service stations in California and around the country. They could save as much as 20 cents a gallon.

“I’m giving away gasoline,” crowed Priceline.com founder Jay Walker, who claims that 10,000 customers signed up for the service Friday in the first 10 minutes of operation on the company’s Web site. “Boy, Americans must be mad about the price of gasoline.”

Discounts on gasoline will be partly subsidized through Web site advertising, national sponsors, partnerships with suppliers (in this case, major oil companies) and fees from participating gas stations that, in turn, are looking for new customers to whom they can sell soda pop and oil changes.

Oil company research has long held that only about one in four customers shops for gasoline by price, but Priceline.com contends that more recent polling has found about half would be bargain hunters if they could save 10 cents to 20 cents a gallon.

That urge may have intensified in recent weeks as prices for crude oil and gasoline have soared because of continuing production cuts by the Organization of Petroleum Exporting Countries, coupled with increased demand for petroleum products.

The near-month contract for West Texas intermediate crude reached $30.93 a barrel Friday, the highest price since Jan. 16, 1991, but settled at $30.35 a barrel on the New York Mercantile Exchange.

The average price of self-serve regular unleaded gasoline nationwide hit $1.41 a gallon last week, the highest since the Energy Information Administration began keeping weekly statistics in 1990.

The California average of $1.44 a gallon was about 33 cents above the price a year ago but well below last year’s peak of $1.62 in mid-April when West Coast refinery problems boosted the price of the state’s unique cleaner-burning gasoline.

Priceline.com has become an e-commerce sensation success by allowing customers to pick a price for the thing they buy with the hope that it will be a bargain. Customers give up some convenience in exchange for price.

After initial success in airline tickets, Priceline.com expanded into hotel rooms, rental cars, auto sales, home mortgages, groceries and collectibles, some in limited areas.

Here’s how Priceline.com’s gasoline transactions will work:

Through a licensee called Priceline WebHouse Club, which is rolling out grocery bidding nationwide in the Priceline.com model, a potential gasoline customer registers online (at https://www.priceline.com), designates specific gasoline stations that have partnered with Priceline (that part is still in the works) and, when the service begins operating, picks a per-gallon price.

If that price is accepted, the customer’s credit card is billed in advance and then the motorist can pump the gasoline at one of the designated stations. Customers use a special Priceline card to credit their accounts, and any unused amount is credited back to the credit card at the end of 30 days. If the pump price falls below the bid price, the customer pays the lower price.

The sales effort has independent gasoline retailers worried, said Will Woods, executive director of the Automotive Trade Organizations of California, a Tustin-based group that represents 2,000 independent service stations and auto repair firms in California. Independent retailers fear that major oil companies will cut bulk, low-priced deals with Priceline that small service stations will be unable to match, he said.

“If there were 20 cents to be made on a gallon of gasoline, the independent dealer would be doing it all day,” Woods said. “It’s going to give consumers lower prices today, but tomorrow they may be paying more” if independent dealers are driven out of business.

Priceline.com’s Walker sees only happy motorists.

“Consumers really need to win here,” he said. “Consumers are very, very smart about saving money. They understand that if they are willing to do a little driving, they can save a lot of money.”

Priceline.com’s stock rose 19 cents a share to close at $56.94 on Nasdaq.