More Gas Stations Switching to Cash Versus Credit Pricing
Local expert says blames tough profit margins and increased credit card fees for increases when paying by credit/debit for gasoline
It is no secret that gas prices are on the rise across the nation. But locally, it seems like the margin between cash and credit prices at local stations is increasing as well. Add in several closed gas stations in recent months, and it's a tough time just to fill your tank.
Several gas stations in Ocean County and the surrounding area have switched from one price per gallon to separate prices when paying by cash versus credit.
These changes are not sudden and can be blamed on a low profit margin, according to Fred Rozell of the Wall Township-based Oil Price Information Service (OPIS). Rozell is the Director of Retail Pricing for the internationally recognized organization.
"The average profit per gallon sold for a local gas station was about 18 cents in 2011, but the profit has been as low as 9 cents in recent years. It averages about 14 cents a gallon," Rozell said.
OPIS estimates that credit card fees for gas stations range from 2.5-3 percent of sales. The Association for Convenience & Fuel Retailing says that credit and debit card fees averaged 4.7 cents per gallon when factoring in all gasoline sales (cash or credit) in 2009.
"It's hard to operate at such a low profit margin when most of these stations are probably only doing about $50,000-$80,000 of business a month.
In Toms River, the Exxon located at 1299 Hooper Ave. and the Lukoil at Routes 166 and 571 recently closed. At the same intersection of Lukoil, the Shell station is now separate pricing for cash and credit.
Many gas stations, except Wawas, seem to display a different price for cash or credit purchases.
Wawa operates six gas stations in Toms River, and all offer the same per-gallon price regardless of the method payment. How can this be? The answer is simple, Rozell said: convenience stores make the difference.
"Wawas are doing about $500,000 a month in business, and the trick is they're getting people inside. If a gas station doesn't have a popular convenience store, they're in trouble," Rozell said.
Local representatives from Wawa, Exxon and Shell did not return Patch's phone calls about their profits and credit fees.
The switch to separate pricing for gasoline is not hard for consumers to notice. Toms River resident Mandy Pearce said she'd be surprised if any consumers were happy about the change. For her, it's a matter of convenience.
"I don't carry that much cash on me," Pearce said. "Why penalize me for that?"
Beachwood resident Kim Hartman said as a result of the switch she's seeking out locations that still offer the same price no matter how you pay. Most cases, that's Wawa.
She doesn't buy the argument that credit card fees are eating into gas station profits. "Maybe for a smaller independent station, but for a big company like Shell or Exxon, it doesn't add up."
Rozell says consumers shouldn't see an increased credit price as a penalty, but instead as a nature of the business.
And if you're looking for relief at the pump any time soon, think again.
"Prices should remain erratic through the spring, but we could hit record levels before Memorial Day" according to Rozell.
Catherine Galioto contributed to this report.