As prices for gasoline continue to climb to some of the highest levels in years, priceline.com Inc. Friday extended its
“name-your-price” model to allow consumers to decide what they will pay for gas.
A recent survey by Opinion Research Corp. International shows that
consumers are very aware of rising gas prices and are actively looking for
alternative ways to reduce the prices they’re paying.
Beginning May 20th, priceline’s (PCLN)
WebHouse Club will launch a new service that makes it possible for drivers
to ignore the price at the pump. Instead, they can go to priceline.com and choose what they will pay for up to 50 gallons of gas a
month. After locking in their price, drivers can get
their gas at local major-brand gas stations selected by Priceline WebHouse
Club. With Priceline for Gasoline, the company said drivers can save 10 to 20 cents a
gallon — sometimes more.
Priceline WebHouse Club gets money from several sources to
significantly lower the gas prices its customers pay. Participating local
gas stations pay WebHouse Club a few cents per gallon to get incremental
business coming to their stations. In addition, the Priceline for Gasoline
service will have paid online advertising, with some of those ad dollars
used to reduce customers’ gas prices. Additionally, more than 100 national
sponsors will contribute to Priceline WebHouse Club customers’ gas purchases
in return for customers’ agreeing to try their products and services.
Finally, Priceline WebHouse Club expects major oil companies to support the
system with additional savings in return for getting new customers for their
gasoline and related products, as well as for the oil companies’ own
proprietary gasoline credit cards.
“This is the perfect time for consumers to do something about the high cost
of gas. It’s the battle of the titans — the global Internet vs. global gas
prices. OPEC was a force to increase the cost of gas. Now, the Internet is
the new counter-force to lower it,” said Jay S. Walker, founder of
priceline.com.
It might just look like a promotional gimmick to take capitalize on consumer
concerns about record-high gasoline prices. But make no mistake, Priceline’s
name-your-price gasoline program is the start of a revolution in energy
sales. That according to Scott T. Jones, an energy economist with Lexecon,
an economics consulting firm based in Chicago.
“A revolution is taking place in the way gasoline is bought and sold,” Jones said.
So if Priceline’s model is good for both consumers and oil companies, why
hasn’t this idea been tried before? Jones said that the petroleum industry
is fairly conservative, but should Priceline’s business-to-consumer
initiative be successful, the major oil companies will soon follow suit.
“Normally what we see is the innovators tend to be not the majors, but the second or third tier sellers who use a vehicle like priceline to initiate this,” Jones said. “The majors will observe this and if it’s successful, they’ll do it on their own.”
“Expect to see the majors get involved, expect to see other dot com, B2B, B2C opportunities and this is just the start of something that’s probably going to be much larger.”
The WebHouse Club, a licensed affiliate of priceline.com, allows
consumers to name their prices online and get their products at a major
local retailer. The company launched its first service for groceries in the
New York area on Nov. 1.
