Drivers may be grumbling about high gas prices, but it’s gas station owners who are getting shortchanged.
Hefty credit-card fees are cutting into station owners’ already thin profits, leading some to make gas sales cash only. With credit-card sales increasingly common, many stations make less selling gas than ever — even as the price drivers pay at the pump continues to rise.
“The average person thinks the retailers are making a fortune,” said oil analyst Tom Kloza. “It’s actually the opposite.”
Today, gas stations make an average of 12 cents per gallon of gas sold, according to the Oil Price Information Service, which assesses the prices at thousands of retailers daily. But that’s before they get charged by credit-card companies -– nearly 10 cents per $4 gallon. Add in occasional transaction fees, and the cost paid by gas station owners, per gallon of gas sold, could hit 15 cents.
In other words, when people use credit cards, a station is lucky to get a few cents per gallon of gas sold, with some getting less and failing to break even.
“Beats me how retailers make money off gas,” said Jeff Lenard of the National Association of Convenience Stores.
It didn’t used to be this way. A decade ago, station owners may have netted 20 cents per gallon in profit. Yet amid increasing competition, many have cut their prices – and potential profit margins – in a bid to keep what drivers pay at the pump down. Even going down 5 or more cents per gallon could slash their profits to next to nothing.
Moreover, people are paying more than ever with credit cards, not cash, and not with oil company-sponsored cards, which typically involve lower fees, if any, for station owners.
“I would estimate that about 70 percent of all sales these days are credit-card (sales), and that figure is rising,” Kloza said.
As a result, credit-card companies are making more with wholesale fuel prices being so high.
“They (credit-card companies) are making twice as much on the gallon now as they did two years ago when gas was $2 a gallon,” Lenard said.
One station, Weymouth Shell, south of the Fore River Bridge, makes a 15-cent profit per gallon before credit-card charges. But after the charges are paid, it makes only a few cents for each gallon sold, owner Jack Kanaan estimated.
“I paid $18,200 and change for credit-card fees last year,” Kanaan said.
