Real-time Gas Pricing
Get used to it – we will extract every dollar you can afford at your friendly …. !
I was reading in the Wall Street Journal about the implementation of Artificial Intelligence for real-time pricing at – hold your breath – your friendly gas station! Before you rub your eyes in disbelief, as I did, this is clearly not widespread – yet – but as reported in the WSJ “it is being implemented in Rotterdam, Holland. Koen van der Knaap began running the system on his family-owned Shell station in recent months and just down the road, a station owned by Tamoil, a gasoline retailer owned by Libya’s Oilinvest Group, uses it too“. So what you may say? How about that the algorithm continually adjusts its price (upwards and downwards) based on what consumers are willing to pay for gas (petrol given the region under question) throughout the day and night. And the provider of the software Ulrik Blichfeldt, chief executive of Denmark-based a2i Systems says “This is not a matter of stealing more money from your customer. It’s about making the margin of people who don’t care, and giving away margin to people who do care,” he said. Oh yeah! Here is my take.
1. Data weaponization – and it can be used for you or against you – but it will be used – The above example where the gas stations are colluding using the AI software and buying behavior and adjusting prices is a clear example. As a leery customer, I would imagine that I am being gouged no matter what Mr. Ulrik says. On the flip side, if the GasBuddy app could help us -consumers – find the cheapest station and that data could be then used to drive prices down – if for example after finding the prices too high, consumers shy away from filling up that day – then data is our friend. Wow – it’s a complex world! And depending on who is better at utilizing real time data, they are going to be ahead of the game.
2. Customized pricing – The market leader – yes Amazon – has been allegedly doing this for a while now but clearly it is not mainstreaming yet. But taking the above example, what if the bold gas (petrol doesn’t roll off my tongue) signs give way to ‘for your eyes only’ and what you pay for Unleaded Petrol is 20 cents higher than what I pay for a liter (ha got it right this time) – would you feel cheated. Tough luck – we are getting there in a hurry. You will be charged what the algorithm has determined you can pay! And that is different than what I can pay! And in all fairness, if a millionaire is 10 Euros for a bag of chips versus a student who is charged 50 cents, is that wrong?
3. Machine vs Machine – The final frontier is when my algorithm colludes (or fights) with yours and you and I are relegated to the background and the software makes all the decisions. In the gas station example, it is my GasBuddy app which automatically connects to the gas station pricing software and when a decision is reached through peaceful negotiation (or software to software combat), my self-driving car is instructed to navigate to the gas station and the funds are deducted from my Bitcoin kitty. And in the world of the future, this sort of collusion could be happening all day long and we really need not be bothered with all the details. Imagine that in the morning we set our preference as Thai for lunch and then all morning the various restaurants pricing and menu software is battling with our digital commerce incarnation to come up with a negotiated price and just before we are headed to lunch, the driverless car is informed of the same and we are chauffeured automatically !
But lost in all of this is that beloved or dreaded word – depending on your point of view – ‘privacy’. As someone once noted, there is no such thing as ‘privacy’ – we are all willing to trade our secrets all the time – what changes is the price we are willing to pay before we give it up!
So, whether we like it or not, we are headed there in a hurry so better fill up fast before the prices go up for you and maybe down for me or the other way around – wait my head is spinning!
By Ashwin Krishnan