Hertz (NYSE:HTZ) has decided to give up on the cash cow of wildly overcharging customers for filling up the tank. Instead of charging $7 a gallon for gas, they'll charge the market price. Oh, don't get me wrong, they'll still charge an outrageous fee for putting gas in the tank when the deal kicks in on July 1. They'll just charge a flat fee of $7 to fill up, plus the market price of gas. What does that translate to in terms of pay, about $100 an hour to pump gas?
I'm pleased that Hertz is getting out of the gas gouging business. Maybe that field has just gotten too competitive lately. It's getting harder to shock Americans with preposterous gas prices. Rental car companies have been charging insane gas rates -- almost what you'd pay in Europe at the pump -- for years. Consumers think of it as their evil little profit center, like phone charges at hotels.
In a story at USAToday, the industry claims that it's only overcharging to scare people into bringing the car back full, so they don't have to hassle with storing the fuel and filling up cars. So why don't they charge that rate for prepaid gas? USAToday did a survey and found that rental car companies sold pre-paid gas at about $4 a gallon, but charged about $8 when someone returned the car less than full.
When I first heard of this story I wondered whether rental car companies were just having a hard time keeping their outrageous markups ahead of the already absurd gas price surges. When my husband and I rented a car recently we noticed that the price you pay when you don't have time to refill was surprisingly close to the actual price. I figured someone had fallen asleep at the switch.
But it turns out maybe we should all be thanking Maryland Attorney General Douglas Gansler. He threatened to sue the big car rental players, then reached an agreement with them to limit the surcharge to 42% or $10 a tank. Hertz told the Baltimore Sun that having the Maryland AG breathing down their neck had absolutely nothing to do with their plan that just happened to come out at the same time. But Maryland officials, as Laura McCandlish reports in the Sun, think they may be laying the groundwork for new national price structures.