Retail Fuel Price Protection Program (F3P)
For a few cents per gallon, the F3P enables you to guard against higher retail fuel prices for several months in advance.
How Does it Work?
On a national level *
- You buy price protection (i.e. insurance) against the U.S. average monthly retail price in gasoline or diesel fuel exceeding prescribed protection levels for up to 12 months. U.S. average prices are recorded by the U.S. Energy Information Agency.
- If the U.S. monthly average is higher than the protection level in a particular month, the gain (monthly average price minus protection level x gallons insured) is applied to the credit or debit card used to purchase the insurance. If the U.S. monthly average is less than the protection level, no gain is applied.
* Price protection may be offered regionally and for some states and cities.
Program Basics
- The premium in $ per gallon for a particular forward month does not change. Before price protection is purchased, the protection level can change at any time reflecting changes in the wholesale gasoline and diesel fuel markets. After the price protection is purchased, the protection level does not change.
- The program is financial only and customers are not obligated to purchase gasoline or diesel fuel at any service station. Specifying gallons and purchasing the insurance is the only action taken by customers. Settlements are automatic at the end of each month.
- Like any insurance, the cost is paid up front. This is the only cost incurred by the customer.
- The minimum volume of gallons that may be insured per transaction is 100. The maximum volume is 10,000. You may purchase insurance for additional gallons in subsequent transactions.
Low Cost Insurance, not a Discount Program
This is a low cost price insurance program, not a discount program. The insurance protects you against higher prices -- and the higher prices go, the more your insurance pays off. Discount programs simply reduce the impact of higher prices, and come with strings attached -- like having to buy fuel at participating service stations.
Once price insurance is purchased, there is nothing the customer need do. No purchase obligations. No insurance "claims" to file. The insurance settles automatically at the end of each month, and gains, if any, are applied to the credit or debit card used to purchase the insurance.
This is a low cost price insurance program, not a discount program. The insurance protects you against higher prices -- and the higher prices go, the more your insurance pays off. Discount programs simply reduce the impact of higher prices, and come with strings attached -- like having to buy fuel at participating service stations.
Once price insurance is purchased, there is nothing the customer need do. No purchase obligations. No insurance "claims" to file. The insurance settles automatically at the end of each month, and gains, if any, are applied to the credit or debit card used to purchase the insurance.
Payment Method
Credit or debit card to enable reimbursements if the price protection pays off.
Examples
Gasoline
Diane commutes 21 miles to work each way. Including personal travel, she drives about 1500 miles per month. Her car averages 17 miles per gallon, so Diane buys approximately 90 gallons of gasoline per month. She enrolls in the price protection program and buys insurance (price protection) on 100 gallons per month for the next three months (months 1 to 3). Her choices look like this:
|
Protection level month 1: $5.00/gal
Premium: $0.05/gal Gallons (min 100, max 10,000): 100 Cost of insurance: $ 5.00 |
Protection level month 2: $5.10/gal
Premium: $0.05/gal Gallons (min 100, max 10,000): 100 Cost of insurance: $ 5.00 |
Protection level month 3: $5.10/gal
Premium: $0.05/gal Gallons (min 100, max 10,000): 100 Cost of insurance: $ 5.00 |
Diane's total cost of insurance for the three months is $15. She pays with her card.
The U.S. monthly averages for the months she chose turn out to be $5.27, $5.09, and $5.38/gal, respectively. Diane gains $0.27/gal, $0/gal, and $0.28/gal in those months. (The monthly averages minus the protection levels.) The gains are multiplied by 100 (the gallons she insured each month) and the amounts are applied automatically to her card.
Diane is credited a total of $55, having spent only $15.
She's happy she protected herself against higher gasoline prices the last three months. She intends to do so again when and if the price protection levels go down. The levels rise and fall with wholesale prices.
The U.S. monthly averages for the months she chose turn out to be $5.27, $5.09, and $5.38/gal, respectively. Diane gains $0.27/gal, $0/gal, and $0.28/gal in those months. (The monthly averages minus the protection levels.) The gains are multiplied by 100 (the gallons she insured each month) and the amounts are applied automatically to her card.
Diane is credited a total of $55, having spent only $15.
She's happy she protected herself against higher gasoline prices the last three months. She intends to do so again when and if the price protection levels go down. The levels rise and fall with wholesale prices.
Diesel Fuel
Ryan is an independent trucker and drives about 5,000 miles per month. Business is improving and he expects to drive more miles in the coming months. He enrolls in the price protection program, and insures 1000 gallons of diesel fuel two months out (month 2) for $0.05/gal. The protection level is $6.25/gal.
At the end of the month he chose, the EIA reports the U.S. average for diesel fuel was $6.63/gal. Ryan gained $0.38/gal on his insurance. He receives $380 back on his card, having spent $50.
Ryan saved $330 on diesel fuel costs in one month, and likes being able to limit the impact of potentially higher diesel fuel prices on his business. He's considering buying another truck and hiring a driver to work for him.
At the end of the month he chose, the EIA reports the U.S. average for diesel fuel was $6.63/gal. Ryan gained $0.38/gal on his insurance. He receives $380 back on his card, having spent $50.
Ryan saved $330 on diesel fuel costs in one month, and likes being able to limit the impact of potentially higher diesel fuel prices on his business. He's considering buying another truck and hiring a driver to work for him.
Agree and Proceed
I understand how the program works and I would like to proceed to choose my price protection.
Choose Your Price Protection
Regular GasolineMost recent U.S. average retail price: $4.75/gal
Protection level month 1: $4.80 (subject to change) Premium: $0.05/gal Gallons (min 50, max 10,000): ________ Cost of insurance: $ _______ |
Diesel FuelMost recent U.S. average retail price: $6.20/gal
Protection level month 1: $6.25 (subject to change) Premium: $0.05/gal Gallons (min 50, max 10,000): ________ Cost of insurance: $ _______ |
Purchase
Cost of gasoline insurance: $______
Cost of diesel fuel insurance: $______
Total cost of insurance: $______
Your credit or debit card information: ________________________________________________________
Pay total cost click
Done!
Cost of diesel fuel insurance: $______
Total cost of insurance: $______
Your credit or debit card information: ________________________________________________________
Pay total cost click
Done!
Now what?
If the U.S. monthly average gasoline or diesel fuel price exceeds your protection level for the month you chose, the gain will be applied to your card automatically.
If the U.S. monthly average price does not exceed your protection level, no gain will be applied to your card. Your insurance didn't pay off, but you participated in flat or lower retail prices, had peace of mind about fuel prices, and didn't spend more than the premium you paid.
If the U.S. monthly average price does not exceed your protection level, no gain will be applied to your card. Your insurance didn't pay off, but you participated in flat or lower retail prices, had peace of mind about fuel prices, and didn't spend more than the premium you paid.