Colorado entrepreneur creates gas auction business
Last Updated: 218 days ago
DENVER - A Colorado gas station owner thinks he has a unique way to put the price of gasoline back into the hands of consumers.
Right now, the average cost of gas in Colorado is $3.52 for one gallon of unleaded, and a recent AAA survey shows half of adults in the U.S. consider gas prices to be “too high” when it reaches $3.44 a gallon.
But Paul James says he’s sold gas for as little as one cent per gallon.
“We are trying to do our part to make buying gas a little more pleasurable and hopefully bring happy customers to our locations,” said James, the owner of four Rexoco stations in Colorado.
He recently launched a gas penny-auction business, the first of its kind in the country.
“I think there's a segment of people that really love saving money and will go to some lengths to make that happen,” said James, adding the average savings his customers have achieved so far is more than 68 cents per gallon.
So far, there are nearly 2,000 registered members on Rexoco.com.
“I’ve come up with a way I think to help market our locations, help provide a great value for our customers and make a fun and competitive market at the same time,” said James, who told 7NEWS he can afford the gas discounts because he gets paid for every bid.
The website runs on a pay-per-click revenue stream.
Each bid costs fifty cents, allowing you to compete for a discounted rate on gas or gas station gift cards.
“It’s the bids that help make up the difference between the discounts and what the street price is,” said James.
7NEWS tested the on-line bidding process. Registration was free and with a verified e-mail address the first three bids are also free.
On our first attempt, it took two bids for us to win a price of $3.05 per gallon of unleaded.
Auction rules specify how, where, and when the winning rate is valid. We found the printed or mobile voucher can only be redeemed once and has to be used within seven days at one of four Rexoco locations statewide. Also, the purchase is capped at thirty gallons of gas.
In the end, our voucher for $3.05 a gallon saved us $4.43 when we filled our Ford Escape with more than nine gallons of gasoline, but the price of two bids would actually knock that total savings down one dollar, to $3.43.
So where does that “penny a gallon” gas come into play?
James also does what are called “reverse auctions.”
“Every bid that's placed will work its way down. So potentially it could stop at a penny, which we've had several at a penny, which ends up being about, in today's prices about $105 savings,” James told 7NEWS.
The bottom line on how much you can save depends on these factors: the distance you’ll have to drive to get to one of the four participating gas stations and how much that will cost you in gas, the discounted rate you win, the number of gallons you buy, and at fifty cents a bid, the number of bids it takes to win.
James tells 7NEWS that he hopes to expand to more convenience store locations throughout Colorado this summer.
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