In a bold marketing move today, Chrysler said it will offer people who buy the company's cars a bit of relief from one of Americans' biggest concerns: gas prices.
The automaker unveiled a "gas card" program, guaranteeing $2.99-a-gallon gasoline for three years to people who buy or lease new cars from Wednesday through June 2, 2008. Customers will be limited to 700 gallons each year and must buy one of 23 models. Chrysler will pay for the cost of gas exceeding $2.99 -- an incentive with a psychological twist.
"The volatility of fuel prices is something people are worried about," Chrysler president Jim Press said. "You have peace of mind and you can do your household budgeting and, you know, people who have to work for a living, they are worrying about these things today."
As for the potential impact, "It won't get people to buy more automobiles, but it will get them to switch brands," Wachovia Bank economist John Silvia said.
Chrysler's approach is a different way to wrap up an incentive package, indicating that gas prices are front and center in consumer psychology, Silvia said.
"Chrysler's offer is only one indication of how sensitive consumers have become to gas prices," he said. "But it's not just at the pump. The higher cost ... is showing up in almost everything we buy."
Chrysler LLC chairman and chief executive Bob Nardelli said the benefits of the marketing measure were multi-faceted. "If you look at the bigger picture — from an energy standpoint, from an environmental standpoint and from an economic standpoint — one would certainly suggest trying to encourage consumers to be more cognizant of not only miles per gallon but the number of miles they're driving," he said.
Meanwhile, in Chicago, the city council approved a $1 surcharge on cab rides to help taxi drivers affected by higher gas prices.
But Chicago cabbie Alfred Haltoon said the surcharge doesn't always help. Sometimes, he said, it comes out of his tips. "Some of [the passengers] don't say nothing about it," he said. "Some of them ask questions and say, 'why is this one dollar extra here?'"
And if you stop for a cup of coffee at a Wawa gas station, it'll cost an extra six cents, which is no surprise for customers.
Also, with summer coming, kids in Lubbock, Texas, will have to come up with more than two quarters for a treat. Ice cream vendor Jay Etheridge said he had to raise prices.
"Ice cream prices go up and everybody wonders where their 50-cent ice cream is and we wonder where the $2 gas is," Etheridge said.
And when it comes to the gas pump, economist Silvia says this is just the start. "We are just beginning to see the upward pressure on the price of gasoline," Silvia said.
You don't need an economist to tell you that — just ask the folks who make the numbers for gas station billboards.
"For the last two to three weeks, I can't seem to get off the phone selling number 4s," Vinny Varma of Empro Products in Paterson, N.J., said.
Four is for $4 a gallon, and he's already getting some calls for 5s.
The Associated Press contributed to this report.