Ever since I’ve read about the use of prepaid mobile recharge vouchers as alternative currency in some inflationist countries of Africa, I’ve been wondering what could be the equivalent in the U.S. should the dollar currency lose its value.
The obvious took some time to come to my mind, probably because I’m not a big user of it myself: gasoline.
Gasoline comes indeed with several properties that make it a very practical alternative currency:
- It’s an excellent store of value:
- consider that the value of being able to drive your own car to work everyday has the same value to you whatever the price in U.S. dollars the gallon is.
- if you intend to use gas as currency to purchase non-gasoline items, and although oil prices in dollars have recently come down from their peak, the risks to the price in U.S. dollars going up in the next 5-10 years are much higher then the risk to go down.
- It’s an excellent standard of value: just like most people know what a dollar gets you, most people know the value of 1, 10 or 20 gallons i.e. how many miles i.e. how much mobility they can get out of each gallon.
- It’s a potentially excellent medium of exchange: unlike gold or U.S. dollar bill, it has intrinsic value for most of us car drivers.
The only problem with the last bullet is that it’s not easy to bank gallons and transfer them from account to account.
Several companies have started to work on something close to this “gasoline banking” capability:
- Fuel Bank‘s Web site says that they will soon offer a “Fuel Card” they can re-load online to lock-in gas prices, and then use this card in participating gas stations, as well as transfer gallons from account to account. When the service will be available is unclear.
- MyGallons.com plans to also offer the ability to lock-in prices and use them later. The company’s CEO explains that the service’s launch has been postponed.
I’ve also stumbled upon this patent about a Prepaid gasoline transaction platform, which could support the concept of “Gasoline as money”.
The recent decline of the price of oil has probably reduced the interest in these companies, but if the dollar depreciates and/or if the price of oil resumes its inevitable long-term trend, or if other geopolitical events reduce the amount of cheap gasoline imported in the U.S., these projects may get back some of their momentum.