Wednesday, July 16, 2008

Gas stations would have to disclose true prices under bill

SACRAMENTO — So, you've just paid $45 with your credit card to fill up a 10-gallon tank at $4.50 a gallon, and the guy next to you goes in to the food mart to pay for his in cash. He also bought 10 gallons of gas, but it cost him $43.65.

A week later, you pull into a station that's advertising prices much lower than others, and you think you finally got a break on gas prices. But when the clerk swipes your credit card, you're paying more than expected.

What gives?

You're getting charged for using a credit card — up to 3 percent per gallon — and may not have known it. That's why Sen. Pat Wiggins, D-Eureka, has a bill, SB623, to require gas stations to post any difference in price between what's advertised and what they charge.

"My goal with the bill is to make sure price differences are displayed adequately," said Wiggins, "so that the customer makes an informed choice and is aware of the opportunity to save."

The bill is awaiting a vote in the Assembly but must return to the Senate because the original bill was gutted and amended — stripped of its contents and replaced by the gas price legislation.

Typically, those who pay with credit or debit cards are charged a fee that's included in the advertised gas prices, and those who pay cash aren't charged that fee — between 1.5 percent and 3 percent per gallon.

Gas stations are charged by credit card companies between 1.5 percent and 3 percent Advertisementper gallon of gas sold as a processing fee for debit and credit transactions. Most gas station owners pass the extra cost on to customers — sometimes without a customer's knowledge.

A 2 percent discount for a driver who pays cash at $4.50 per gallon to fill up a 12-gallon tank could mean $1.08 in savings with each fill up, a $56.16 savings over a year with weekly fill-ups. A 3 percent discount for the same driver could mean $1.62 per fill-up and $84.24 over a year.

"I think that more people would pay cash if they understood how much money they could save," Wiggins said. "And the money they save could be spent on food or other costs of living."

Assemblyman Alan Nakanishi, R-Lodi, a member of the Assembly Committee on Appropriations that approved the bill by an 11-4 vote last week, voted against the bill, saying it's another added burden that businesses don't need.

"It's a nanny type of law that's going to mandate businesses and we don't want to increase costs," he said.

But Wiggins said some gas station owners may find this bill beneficial to the bottom line if it results in an increase in cash payments. Convenience stores and service stations — where more than three-quarters of gas in the United States is pumped — especially lack bargaining power with the credit card companies, which made $42 billion in retail interchange fees last year, said Jay McKeeman, vice president of governmental relations for the California Independent Oil Marketers Association.

Gas station owners "can't negotiate with MasterCard or Visa," McKeeman said. "They figure out the fee and you take it or leave it. You don't have to agree but you'd lose 80 percent of your customers to their bully tactics."

Some owners have said they operate on such low profit margins that they make more revenue from stores on site, where an additional purchase may occur when customers approach the register to pay for the gas with cash.

"Cash is beneficial then, because many times when people pay they come inside and buy things too," said Wiggins.

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