Interesting idea from Chrysler

It's a better deal if you're buying a diesel, since that's higher than $4/gal pretty much everywhere, and it'll take a lot longer for it to drop under $3/gal.

 

If this works like a future, then you are locked into paying that price.

I was pitched this for natural gas a year or two ago, but nat gas stayed pretty stable compared to oil.

 

Sounds like a stock option. If the price stays above the target, you have something valuable. If it goes below, you have a paperweight. But nobody forces you to use either the option or the gas card.

 

Devil, I think you're crediting Chrysler with too much foresight. If they could predict the future, don't you think they would have more hybrids out there now?

 

Well it obviously doesn't work like a future because the buyer isn't forced to use the card. If the price drops just pay with cash or another card. It gives an option, it doesn't lock em in. Isn't that just common sense?

 

Exactly.

It's pretty clear in the story that they give you a card that allows you purchase gas for $2.99/gallon. You're not purchasing the gas in advance.

So, all you do is when you get out of your car, look at the price at the pump. If it's higher than $2.99, use the card. If it's lower, don't. This ain't advanced economics here, people.

 

D'oh!

 

Assuming that worst case scenario came to pass, Chrysler would still be no worse off with that $3000 loss than if those cars never sold at all, because that IS what's happening to them now.

Perhaps you hadn't noticed but Chrysler is in dire straits right now. Their dealerships are backlogged in gas guzzling inventory all across the country. They need to move vehicles and they need to move them NOW. It's primarily desperation that motivated this idea. No doubt they hope prices drop below $2.99 and might have reason to believe it'll happen, but they've no crystal ball either.

 

It also helps that Chrysler is owned privately and therefore free to try wacky things that might send public investors scurrying away.

 

One of everybody's favorite bands from the 80s decided to go a new direction in the new millennium, adding controversial bandmate Chrysler.

 

Good Doctor will want to add this to the running list of proclamations I have made:

If McCain wins, gas will be $5 a gallon.

And if one of the Dems win, gas will be $10 a gallon.

 

Except none of us can afford a new car because we're journalists.