Think it is a great time, with gas so expensive, to run a gas station? Think again. The credit card industry is nailing the gas stations, hard:
Dozens of gas stations in Massachusetts have stopped selling gas or shut down, and hundreds more are expected to follow suit because rising costs coupled with crippling credit card fees and fewer customers make it impossible for them to afford the roughly $40,000 it costs to refill their underground tanks, according to the New England Service Station and Repair Association…
The problem lies in large part with credit cards, industry officials say. Gas stations customarily mark up the price by 8 to 12 cents per gallon, no matter the market conditions. But credit card companies charge a fee of 2 percent to 3 percent per sale. So as the price-per-gallon increases, the gas stations pay a larger share of their profits to credit companies. And these days, more customers are paying with credit cards because few carry the $60 or $70 in cash it costs to fill up, said Paul O’Connell, the New England Service Station and Repair Association’s executive director.
The station’s margin is a fixed amount, which is being surpassed by the percent credit cards charge – so many gas stations are losing money for every gallon they sell. Plus it’s tough for gas stations to raise prices – the product is interchangeable, the price is clearly posted, and it’s easy to go across the street if someone is a penny lower. That’s why you see so many discounts at stores if you are willing to pay cash – the gas crisis is another huge money maker for the credit card industry. (The gas tax holiday would have been another moneymaker too!)
If Obama has the balls to take a beating stick to the credit card industry next year, don’t shed too many tears.