Gas Price Switcharoo

[Winger]

Maybe I've been living in a box, but I've never noticed gas stations w/ 2 different prices for the same gas depending on how you pay.

Today I roll into Valero to pay $4.03/gallon, swipe my card, then notice the pump price says $4.13 for the cheap stuff. Perplexed, I scan the main gas station sign and it says $4.03/gallon. Then I notice a WAY smaller sign that I didn't see from the road showing different prices for cash and credit cards.

I call BS on the gas station because probably 75% of credit card buyers never notice the price difference and think they are getting a deal. That's bait & switch.

I can live with higher gas prices because that's a part of life, but deception is unacceptable.

[davidB]

last time that happened to me I realized I drove into the gas station through the driveway with the giant sign right next to it. Hard to argue with deception when it's right there with letters as big as my head.

[Pugz]

I had that happen to me also. Really sucks but now I pay attention.

[drew12]

This has been around for a long time.
CCards cost 1.5-5%.
I think companies should be able to pass these cost on to the consumer if they choose to pay by CC.
However;
I was told by my accting dept that there is only supposed to be one price, and you cannot charge extra for CCards, as I wanted to start doing this.
Maybe Gas is exempt?

Pay pal me $10 and I keep only $9.41, looks like a 5.9% fee to me!

[BrewMaster]

This used to be the norm. In the 90s they started having CC be the same price as cash. I guess some stations are going back to the 80s. Bitches...

[Kid A]

dood old news. go shopping in nyc see a store on the corner and walk on the avenue side and see something in the window one price (fo da tourists). walk past same store on corner but look in window on street side...lower price, huh???

[spookydave]

Originally Posted by drew12

This has been around for a long time.
CCards cost 1.5-5%.
I think companies should be able to pass these cost on to the consumer if they choose to pay by CC.
However;
I was told by my accting dept that there is only supposed to be one price, and you cannot charge extra for CCards, as I wanted to start doing this.
Maybe Gas is exempt?

My merchant service told me the same thing. Those extra ATM fees piss me off too. Taco Bell wanted to charge me will over 1.00 just to use their atm. I thanked them for forcing me to eat better.

But on the other hand you guys must not know the profit margin on fuel. Put it this way, if you bought gas with a rewards credit card they would loose money on that sale. They make money on a candy bar but not really on the fuel.

Just so you know, those reward points are not free. I pay them when you use the card at my place. And the fees work out to over 5% on those cards. American Express and Discover's fees are so high I won't take those cards at all.

[Winger]

On large purchases I typically ask the store if they will give me a discount for paying cash. Often they will. When I'm getting up to 3% back for using my credit cards, I figure the store has to be paying more than that.

[Elisheva]

There's an ARCO I use and if I press "credit" button as opposed to "debit", I am not charged a transaction fee. But at other ARCO's this isn't true; I am charged for a transaction fee with credit card or debit card. Haven't figured that one out.

[spookydave]

ok here you go. I have a friend whos dad owns a gas station. This is the question from a few weeks ago.



"My Dad is a partner with three other guys in an independent gas station in Sonoma, CA. The no-load tenant decided one day just to up and leave, stop paying rent and leave my Dad and his partners holding the bag.

So, instead of just being a real-estate partner in a property with a long term lease tenant, he had to become a gas station owner by default.

There is no market to buy an independent gas station in arrears right now, so it was a total matter of suck it up and get to work... like he needed more stuff to do right now.

Anyway, he has since been forced to become an expert in running a service station. Point of purchase sales stuff, gas futures and purchasing 15K gallons at a time... the whole shootin match. I have learned a lot about the industry through his tales in the last several months, and have an interesting little trivia question for you... If you know the answer for certain... don't blurt it out. You will ruin the fun..

What do you think my Dad paid per gallon for regular unleaded today to fill up his tanks? Keep in mind volume discounts and the price of gas at your local station today..."


The answer

"Regular unleaded... 15,000 Gallons at a time... $4.06/gallon. And that doesn't include about 13 cents per gallon for some local tax. So... close to $4.19/gallon put into the ground.

Sold at retail to be even borderline competitive means about, as speculated... 10 cents cash... if you get charged 2% credit fees by the card company on $4.16/gallon you can see that the fees amount to over 8 cents per gallon. IF they pay by American Express, it can cost him money to sell you gas believe it or not.

He bumped up his price to $4.30 today out of necessity. He was literally paying to pump gas at the price he paid for it. Tough to compete with a branded station right now too... who are currently paying a little less for gas than he is. Like .02/gallon less.

So, gross expected profit on a $60,900 purchase will range somewhere between $1500 and $300... before you pay the manager, before you pay the insurance, rent, certifications etc...

He can't wait to get out."

[Winger]

Originally Posted by spookydave

So, gross expected profit on a $60,900 purchase will range somewhere between $1500 and $300... before you pay the manager, before you pay the insurance, rent, certifications etc...

He can't wait to get out."

This can't be true of every station out there. I believe margins are low because of the perfect model of competition (street signs advertising prices), but stations wouldn't be in the business if they were doing business like the model above. They'd be better off leaving the land unoccupied.

There has to be more to the story, such as the inexperienced management not finding the right sources for gas, or that the real money is in the snack shop, using gas to lure in consumers.

[art23rockpile]

Originally Posted by Winger

Maybe I've been living in a box, but I've never noticed gas stations w/ 2 different prices for the same gas depending on how you pay.

Today I roll into Valero to pay $4.03/gallon, swipe my card, then notice the pump price says $4.13 for the cheap stuff. Perplexed, I scan the main gas station sign and it says $4.03/gallon. Then I notice a WAY smaller sign that I didn't see from the road showing different prices for cash and credit cards.

I call BS on the gas station because probably 75% of credit card buyers never notice the price difference and think they are getting a deal. That's bait & switch.

I can live with higher gas prices because that's a part of life, but deception is unacceptable.

But high gas prices are BASED on deception!

[Pain Freak]

I refuse to use ARCO because of this tatic. Just put the true price on the board and everyone pays the same, weather cc or cash.

[spookydave]

Originally Posted by Winger

This can't be true of every station out there. I believe margins are low because of the perfect model of competition (street signs advertising prices), but stations wouldn't be in the business if they were doing business like the model above. They'd be better off leaving the land unoccupied.

There has to be more to the story, such as the inexperienced management not finding the right sources for gas, or that the real money is in the snack shop, using gas to lure in consumers.

You hit the nail on the head with the snack shop. When was the last time you saw a gas station with out one? Heck, now they have Sub Ways and KFC at gas stations.

[drew12]

Originally Posted by Pain Freak

I refuse to use ARCO because of this tatic. Just put the true price on the board and everyone pays the same, weather cc or cash.

I won't use Arco because their gas is second rate.
Lower mileage, less performace. The alcohol they add lowers performance.
For what it costs, and that I really like my car, I use quality gas.

I also won't use Citgo ( 7-11) because it is from Venezuela. And you
should know what their president, Hugo Chavez, thinks of the US. If you don't, take a moment and look it up.

The high price of gas is currently a result of speculation in the futures market, the open market, and
to a lesser extent on the weakness of the dollar.

[evdog]

Originally Posted by Winger

I call BS on the gas station because probably 75% of credit card buyers never notice the price difference and think they are getting a deal. That's bait & switch.

I can live with higher gas prices because that's a part of life, but deception is unacceptable.

How many of those people miss it because they are too busy talking on the cell and sipping their latte's while filling up their Hummers or Mercs? Sure it is a bit deceptive if you're not paying attention. Sorry if I don't feel bad for those people at all, but everyone should know by now there is no one to look out for you but you!

This is really no different than cable / wireless providers or any number of other businesses that advertise one price and then tack on all kinds of fees after the fact.

Originally Posted by Pain Freak

I refuse to use ARCO because of this tatic. Just put the true price on the board and everyone pays the same, weather cc or cash.

Most of the major brand stations that still do that. I guess using two different prices is one of the few ways that brands like Arco and Valero can compete. Look at it this way - if you go to an Exxon or Shell where everyone pays the same price then you are paying them 2% extra when you pay by cash. If that makes you happier then by all means...

Originally Posted by spookydave

"Regular unleaded... 15,000 Gallons at a time... $4.06/gallon. And that doesn't include about 13 cents per gallon for some local tax. So... close to $4.19/gallon put into the ground.
....
Sold at retail to be even borderline competitive means about, as speculated... 10 cents cash...
....
He bumped up his price to $4.30 today out of necessity. He was literally paying to pump gas at the price he paid for it. Tough to compete with a branded station right now too... who are currently paying a little less for gas than he is. Like .02/gallon less.

Thanks for the story Spookydave. Sounds tough to survive as an independent. Here's my cynical take on it: the major branded stations like Exxon, Shell, Chevron etc buy their gas from the same wholesalers your friend's dad does. Except that they have already taken all their profit by selling their oil to refineries. Because of that they can afford to run their stations to break even or take a bit of a loss. So when your friends dad raises prices to survive do the branded stations around him raise prices to match it? Sounds like this would be a great way to drive up prices.