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New ways to beat high gas prices

The way you pay for gas can make a big difference in how much you shell out at the pump.

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While some drivers go online to find the lowest prices in their neighborhood and others drive around burning precious gas to save a penny or two per gallon, others are learning that "hedging," prepayment options and which credit card to pay with can save serious money when they fill their tanks.

Lowering your gas costs
The first two options may or may not be cost effective for you. You can easily find out by using Bankrate's interactive gas-savings calculator.

But failing that, and short of trading in your gas guzzler for a puddle jumper that runs on corn oil, here are three new ways that can make a big difference in how much you shell out at the pump.
3 new methods
1. Fuel banks: Buy increments of gasoline in advance at a set price.
2. Hedging: Find money to pay for your gas through investing in derivatives.
3. Credit cards: New incentives make the savings more attractive.

Fuel banks
One example of heads-up buying can be found at a small chain of family-owned gas stations in St. Cloud, Minn.

As gas prices continue to erode drivers' budgets, a six-station gasoline retail chain called First Fuel Banks has gotten more than its share of attention.

For 17 years, First Fuel Banks has pegged its business on allowing customers to buy their gasoline in bulk when prices are down and then pump the fuel as they need it over time.

"We are giving our customers the advantage of buying when prices are low to protect against when prices are high," says Danette Burlet of First Fuel Banks.

Unlike traditional prepaid gasoline cards, at First Fuel Banks customers buy a set number of gallons, rather than just deposit a set amount of money onto a card. Even as gas prices rise and fall, the number of gallons a customer has purchased remains the same until they pump them into their tank.

By allowing customers to buy gas by the hundred- or even thousand-gallon increment, First Fuel Banks is essentially allowing drivers to make financial hedges against future fuel prices, much like how major airlines buy jet fuel futures on the commodities market to protect against rising oil prices.

Some of First Fuel Banks' customers are still pumping gas they bought years ago at less than $1 per gallon.

"We have prices ranging all over the place, with some as low as 79 cents per gallon," Burlet says. "Mostly we have people who locked in at $1.99 and up."

Drivers benefit, as long as the price for gas stays above their locked-in price, and First Fuel Banks protects themselves though a complex combination of financial deals, including buying fuel futures on commodities markets.

And while motorists' interest has grown lately in First Fuel Banks' prepay system, Burlet says the best time to lock in a long-term contract isn't when prices are at their highest.

"Our really good customers watch the market and get in when prices are the lowest," she says. "Our savvy buyers are always looking ahead."

After all, Burlet says buying 1,000 gallons at $3 per gallon doesn't make sense unless you think prices are going to continue to climb.

With drivers across the globe hurting from soaring fuel prices, Burlet says First Fuel Banks has been peppered with requests to expand beyond the St. Cloud market.

"We have been getting bombarded with requests from around the nation and the world," she says. "But we have been here for 17 years, and we are not looking to expand."

Next: "If you buy timely you will benefit, if you do not, you will not."
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