Gas station owners not pumped about higher prices
Posted June 2, 2008 5:33 p.m. EDT
Updated June 2, 2008 6:43 p.m. EDT
Raleigh, N.C. — Record gas prices might mean record profits for oil companies, but gas station owners said those profits don't trickle down to the neighborhood pumps.
Credit card processing fees are eating into the thin profit margins at smaller stations, owners said, adding that they're losing money on every gallon they sell.
"You lose money anytime people use a credit card to pay for gas," station owner Steve Byers said. "People would be really shocked if they put $125 worth of gas in their SUVs on a credit card, when in fact we've lost money."
Credit card companies charge merchant fees in the form of a percentage of sales. Byers and other owners said the fees were more manageable when gasoline was around $2 or $2.50 a gallon, but the fees have soared along with gas prices in recent months.
Nationally, the average price for a gallon of regular gas on Monday was just under $3.98. In the Triangle, the average was about $3.92 a gallon.
According to a recent study, nearly two of every three U.S. drivers use credit cards at the gas pump. In addition to convenience, many pumps are programmed to require payment in advance to discourage theft.
That leaves station owners with two choices: Raise prices and risk losing customers, or keep them as low as possible and lose money.
"It's a balancing act, and you've always got someone across the street that you've got to compete with," said Gary Harris, executive director of the North Carolina Petroleum Marketers Association.
Because of fees, credit card companies made almost twice as much money off gas sales last year than retailers, Harris said.
"What you're going to see is a lot more discount (prices) for cash," he said. "It's cheaper for (station owners) for you to buy with cash than with a credit card."
Byers said he relies on sales inside his convenience store to stay afloat.
"I appreciate you coming in and paying cash. I can actually make 50 cents," he said.