03 Jul 2013

Rental Car Gas Options

Conspiracy, Economics 14 Comments

What’s the story with these options? I took a photo at my recent trip to a car rental place:

So if you read the fine print–or if you just use common sense and figure the car rental place isn’t going to sell you gas at below-market prices–then it looks like pre-paying for a “full tank of gas” at an apparently cheap price, only works because they’re actually charging you the price x tank capacity when obviously not everybody is going to return the vehicle as it stalls from running out of gas.

However, when I was explaining this to my business partner on a recent road trip, he was arguing with me, saying that’s not the deal the person at the counter explained to him. I called up the place (we were driving back), and made sure the employee on the phone was quite explicit that they were not charging us for the full tank, but only for the difference (and at the apparently generous price).

Indeed, recently when we rented from the same place, the employee said (as we walked around the vehicle looking for scratches), “Yeah, we won’t charge you for the full tank like they do at the airport.”

So what’s going on? Have we discovered a particular location of this national chain, where the employees are either (a) very generous, (b) ignorant of company policy, or (c) pathological liars? In case it helps explain this post: I was not the one renting the car, so I never really inspected the final bill with a microscope. So I don’t know whether they were actually charging us for the full tank or not.

14 Responses to “Rental Car Gas Options”

  1. Andrew says:

    It’s even more confusing if you go to their website. If you pre-pay, it is non-refundable. How do they charge you for anything BUT a full tank?

    As a customer, you have a choice as to how you would like to pay for fuel.

    At all locations:

    · Before returning; you may refuel the vehicle to the same fuel level you received when you picked up the vehicle.

    At airport locations:

    · You may refuel or opt to pre-pay for fuel.

    Why would I opt to pre-pay?

    Pre-pay gives you two conveniences:

    · You can avoid the hassle of having to fuel up the vehicle before returning.

    · Pre-pay fuel option is calculated at the local rate of gas minus a per gallon discount.

    Note: Prepaid fuel is only sold in full tanks at the discounted price per gallon and is not refundable. Local fuel rates will vary by the area you are renting a vehicle.

    What happens if I choose not to refuel the vehicle?

    If a renter chooses not to refuel the vehicle they will be charged the local Enterprise rate which is typically above the local pump price.

  2. Matt M. (Dude Where's My Freedom) says:

    Time preference. They value the pre-paid money more because it is immediate, and therefore are willing to charge less for it. Of course, I don’t even want to think of the discount rate that would be necessary to produce such a huge difference…

  3. Ben says:

    Unless you have high certainty of (a) how far you will drive (b) the mileage of the car, and (c) the precision of the car’s gas gauge, it is very hard to make a good up front estimate of how much gas to buy. So to avoid the hassle of having to stop by the gas station before returning the car you can either pre-pay for more gas than you likely need or post-pay for the exact amount at a higher price.Since I make the same business trip often, and get the same model car every time, I have become good at playing this game.

  4. JimS says:

    “the employees are either (a) very generous, (b) ignorant of company policy, or (c) pathological liars”

    I dated a girl from a rental agency; they are pathalogical liars.

  5. Anthony says:

    Budget has a 3rd option: travel 75 miles or less and charge you 13.50$ or so.

    Unfortunately I went 78 miles and had to refuel paying for over 5 gallons($4+ Cali)

  6. whiskey1bravo says:

    Why can’t you just go to a gas station and fill up before you bring the car back?

    • Ken B says:

      That’s option 3, but if you miss it’s option 2.

      • Ken P says:

        Exactly. Only most places option 2 is more like $8 a gallon.

        Option 3 can be a problem if you are running late for the airport or if there isn’t one nearby.

  7. Matt Tanous says:

    They make money back on people who choose option 3 and return the car with more gas just to be safe.

  8. Tel says:

    Tax claims.

    If I take the car with a full tank, then fill it up at the cheapest place, then return it with a full tank, I spend less money but can’t claim the gas station invoice because some bozo will say I might have filled a private car.

    This is even worse with corporate travel where the claim goes up the chain and the guy in the field does’t care about the total, just wants the most solid claim.

    Also option #1 is faster to process.

    • Ken P says:

      It’s a tradeoff of money for leisure.

      I didn’t think about the insurance aspect last time I rented a car. They managed to upsell me insurance because I wasn’t sure I was covered driving a rental out of the country and didn’t want to spend the time on the phone or maybe have to deal with proving it at the border.

    • Ken P says:

      I was trying to respond to the original post.

  9. Blackadder says:

    My guess: a certain percentage of people are going to not pre-pay and then not fill up their tank (because they forget, are rushed for time, etc.). So this lets the rental car place jack up the price for those folks.

  10. Cameron says:

    I happened to work for this exact agency (grabbed the first gig I could before heading off to grad school) and can probably clear the waters a bit.

    There are a few ways that the rental agency can sell gas to you.

    A) A pre-paid full tank at the (what appears to be) discounted price. However, when you look at the receipts, the pre-paid tank is taxed and doesn’t actually save you money (depending on the location and applicable tax rate). The reason it’s taxed is because you are buying a Fuel Service Option, not the gas itself. You’re paying for the service of someone else pumping the gas that you are required to return the vehicle with, not the gas itself.

    B) They can offer for you to pay the difference of what you’ve actually consumed. This is usually what is offered at locations that aren’t able to keep all their vehicles’ tanks full. For example, you get the car at 3/4 and the agent offers you the option to return the car at whatever level you want, and upon return he will just have you square up with him for whatever difference you return the car with (the computers can tell you how much gas was used when you enter the starting and ending levels).

    You see Situation A at airport locations, but not so much off-airport locations because many don’t have gas facilities on-site. Whereas Situation B is the opposite and is more common at off-airport locations, and not allowed at all in the airports.

    It’s not really that people are generous, ignorant of policy, or liars, (but all three of those are applicable in many circumstances) it’s just that the computer system allows for a lot of flexibility in how you carry out transactions and many locations find different options to be more suitable than what the corporate level policy is.

    For many employees it’s a numbers game in a way. When you are lower level and you need to “show off” your sales abilities, any amount of “revenue” under your name is a positive. It doesn’t matter if you technically had the customer pay less than market price for the gas and are causing a deficit. All that can be seen on the surface is Joe Schmo collected X dollars in gas the past month and therefore is promotion material.

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