Now that gas is cheap (again), we wish it was even cheaper

Commentary: Americans sure do love them a discount (and how).



I was having my car inspected at a Shell station on Saturday, and I noticed the Shell Saver Card. It links your checking account to a card (more like a gift card than a credit card) to allow direct debit at the pump. If you sign up now, you save $0.05/gallon until June 1st, and $0.02/gallon thereafter.

I was reminded of this again today when I saw a story on Consumerist about something similar in the lone star state. I read the story, dismissed it, and returned to work for about 5 minutes before I lost control of the voices. They said:

Right now, you use your American Express Blue Cash to get 1% back on gas (and groceries) for the first $6500/year, and 5% back for the rest of the year after you cross $6500. Is this a better deal?!?! Are you leaving precious pennies on the table?

I mean, fuck, how do I get any work done? Even my god-damned voices have OCD.

Thankfully, I kept the spreadsheet I made last month to calculate my energy expenditures so I could hedge my estimated energy costs for 2009. For the closest comparison, I found where I hit $6500 on my AMEX (sometime in March), so I figured out 1.0% rewards on Dec-Mar, then 5% back on Apr-Nov. Then I divided the US average against what I spent to estimate gallons of gas bought, and multiplied it by (average price minus $0.05 for Dec-Jun and $0.02 for Jun-Dec). My math is a little b0rked, but here's what I got:

AMEX 1% - $4.78
AMEX 5% - $118.90
Total - $123.68

Shell $0.05 - $19.77
Shell $0.02 - $9.13
Total - $28.90

Caveats: 1) per-gallon discount is immediate, AMEX rewards is annual. 2) Rewards is likely overstated; as gas was expensive, my rewards were equally inflated 3) I would have to always go to a Shell to get these rewards, with my AMEX I can butter any gas station's bread as I see fit 4) Since I backed into the consumption numbers using the national average for that week, who the hell knows.

That's right, I did the math so you don't have to.

Had this program existed last year (when gas was hellua expensive), and I chose the Shell foolishness instead of using my AMEX Blue Cash, I would have lost out on almost $100 in rewards. I'm going to stick to my Blue Cash.

Voices satisfied, back to work.

Hedging the Cost of Energy

What an exciting year for energy! If you were an investing genius like me, you bought high and sold low. All is not lost, however, because my investments in energy were (mostly) just a hedge, so they did exactly what they were supposed to do.

For example: my electric bill is about $100 per month, so in January I purchased $1200.00 in Dominion directly through Dominion DRIPS. Today, my stock is worth $1,020.98 (though I have more shares because of dividend payments). Even though the value of my stock went down, my energy costs went down, which should offset the loss. I'll be investing another $1200.00 next month.

Maybe you don't pay an electric bill, but you do put gas in your car. I decided to look at my last year of spending on gas, lined up against the average price of a gallon of gas in the US:



I spent an average of $119.02 every two weeks, or $2,856.42 for the year. This number is slightly inflated if you consider that I pay for gas with my American Express Blue Cash card, which rewards me 1.0% on gas for the first $6,500.00 per year I charge on the card, and 5% on gas after I pass the $6,500.00 mark. As of October's statement (11 months), I had earned $247.54 on $6,249.73 spending (including Gas,Grocery, & Drugstore).

So what does all this mean? If I spend roughly $3,000.00 a year on gas, I should be hedging that amount in an equivalent energy hedge. That way, if the price of gas goes up, the value of my hedge goes up as well. If it goes down, even though the value of my hedge is reduced, so is the amount I spend on gas. This way, I'm don't get it coming and going when commodity prices fluctuate (which they are expected to through 2010 as we ease out of the current recession).

Now, where do you park your money? You could buy stock in Exxon-Mobile (a company forged in the fires of hell from pure evil), Shell, Chevon, BP, or any other company with a big stake in US retail gas sales. You could invest directly in oil through an exchange traded fund (ETF) like USO. You could invest in the broader energy market through an ETF like Vanguard's Energy ETF.

However you decide to hedge, it's something you should put on your list of New Year's resolutions.

Charge Everything, Get Cash Back

As credit cards go, cash rewards are my favorite. Way back, I had an American Airlines AA Advantage card, but I realized that was like trying to furnish my apartment with skeeball prizes. You may recall that I had a Chase Perfect Card, which credited your bill each month with last month's rebate. Others, like the Amex Blue Cash Card I replaced it with, credits your bill with the rebate at the end of the year.

Blue Cash has a sliding scale for rewards: "For the first $6,500, you earn 1% on purchases at grocery stores, gas stations and drug stores and 0.5% on everything else. Once you've gone past $6,500 for the year, you earn 5% on purchases at grocery stores, gas stations and drug stores and 1.5% on everything else."

So how did I do?

Charges: 21,316.00
Rebate: 367.34
Percentage: 1.72%

I didn't start using my Blue Cash until February, so that's a month sooner I could have reached $6,500. Keep in mind that many of my recurring monthly charges (haircut, maids) do not accept American Express, so those were going on my debit card.

For 2008, I've adopted the hybrid Amex Blue Cash / Chase Freedom approach. The Chase not only earns me 1% on the things I couldn't use my Amex for, but I've moved my tv/internet/cell phone over to it so I can earn 3% back on those. Chase gave me $50 in rewards for opening the account, and credits the rebate to your bill once you call and request. If you allow $200 in rewards to accumulate, Chase credits $250 to your account. My goal is to earn at least $150 in rewards from that card this year so I benefit from the free $100 ($50 signup plus $50 deferred rebate). I may hate the CEO of Chase bank, but I'll take his money.

I hope the CEO of Chase Bank dies in a fire

I called Chase from my work phone Saturday morning for two reasons: find out my interest rate, and to talk them down to 0% for 12 months. Now this tactic rarely works with credit card companies because they (like cell phone providers) treat new customers like gold and existing customers like rust.

I spoke to a woman in customer service who could not help me, so she transferred me to some other department. I waited on hold for almost 5 minutes before the phone hung up on me. Thinking nothing of it, I just decided I'd conduct this negotiation online using their (horrible, awful, hideous, user-adversarial) website. I exchanged three emails with three different agents who clearly didn't read what I wrote to them.

Around 4:00pm, I decided to run to Wegmans and get some groceries. I filled up my cart with a weeks worth of tastiness, swiped my little Chase Mastercard, and bang...declined. Since I had Just done my bills, and I knew I had about $9,200 in available credit, I knew I was in for a treat.

I called the 800 number on my card and was directed to the consumer fraud department. Miss Shanaynay answered and done-asked me a half dozen random security questions to make sure I was me, and was all "what can I do for you?"

"Umm...why am I talked to you? And why was my card declined?"

"Well sir, you called in from a number we didn't recognize yesterday, and you never spoke to the person you were directed to so your account was suspended."

"Wait...so...I called in from my office number, which you should have on file, I answered all the security questions I was asked, and because I was transferred to another department and disconnected before I got there my account was suspended?"

"That is correct."

"And no one called me back?"

"No sir, we don't do that."

"Well I exchanged three emails with customer service about my interest rate after that. None of them thought to mention there was an issue with my account, or indicate that I really should call in to discuss this so you could verify my identity?"

"No."

"Alright. Are you authorized to close my account? Because that is who I need to speak to right now."

When I finally got to the retention specialist, dude was like "I can give you 10.74% on your account." I told him, "I am already an American Express customer, and I have an offer in my hand: 0% for 12 months on purchases and balance transfers. If you can't match that then close my account and go fuck yourself."

He closed the account. My car loan is with Chase, and when that fucker is gone in January they're not getting my business again.