Lewis
Member
They share your pain when gas prices soar but not your nostalgia for service bays. And although they accept debit cards, using one might cost more than you think.
1. "Good luck finding the best deal."
When it comes to gas prices, most stations are branded -- meaning the name of a major oil company hangs out front -- and must buy gas from their proprietary company. They can't shop around.
With a lock on sales, the oil companies charge each station a different price depending on various factors, such as the station's competition and its location. That means a station might have to pay a lot more than one down the street, and that cost gets passed along to you.
And you'd be wise to shop around because with prices constantly in motion, the cheapest gas may not be at the same station every time.
2. "I hate it when gas prices go up."
Stations earn, on average, 10 to 15 cents on a gallon of gas. Ironically, they earn the least when prices are highest. When fuel climbs, gas stations usually must shrink their profit margins to remain competitive, meaning they earn less per gallon.
But another big cost during tough times is something they can't do anything about: credit card fees, which add up to about 2.5% of all purchases. When gas is at, say, $2 a gallon, stations pay credit card companies 5 cents a gallon; when gas hits $3, that fee becomes 7.5 cents, at least half of the stations' average profits.
"Those credit card fees are miserable for the gas station business," says Mohsen Arabshahi, who owns five Southern California stations.
How do station owners make up for lost revenue? "Prices go up like a rocket and come down like a feather," says Richard Gilbert, a professor of economics at the University of California, Berkeley. For several weeks after wholesale prices drop, stations can earn as much as 20 cents a gallon before retail prices are lowered to reflect the change.
3. "My gas isn't better for your car; it's just more expensive."
Oil companies spend lots of money explaining why their gas is better than the competition's. Chevron's gas, for example, is fortified with Techron, and Amoco Ultimate is supposed to save the planet along with your engine. But today, more than ever, one gallon of gas is as good as the next.
True, additives help to clean your engine, but what the companies don't tell you is that all gas has them. Since 1994, the government has required that detergents be added to all gasoline to help prevent fuel injectors from clogging.
State and local regulators keep a close watch to make sure those standards are met; a 2005 study indicated that Florida inspectors checked 45,000 samples to ensure the state's gas supply was up to snuff, and 99% of the time it was.
"There's little difference between brand-name gas and any other," AAA spokesman Geoff Sundstrom says.
What's more, your local Chevron station may sell gas refined by Shell or Exxon Mobil. Suppliers share pipelines, so they all use the same fuel. And the difference between the most expensive brand-name gas and the lowliest gallon of no-brand fuel? Often just a quart of detergent added to an 8,000-gallon tanker truck.
4. "If you're smart, you'll put that debit card away."
Your debit card might be a convenient way to pay for gas, but it's a no-win proposition. When you swipe a debit card at the pump, the bank doesn't know how much money you'll be spending until you've finished pumping. So to make sure you have the funds to cover the purchase, some stations ask banks to automatically set aside some of your money: That amount can be $20 or more. That means even if you just topped off your tank for $10, you could be out $30, $50 or even $100 until the station sends over its bulk transactions, which can take up to three days. If your funds are running low, you might end up bouncing a check in the meantime, even though you had the money in your account.
Unfortunately, paying inside with your debit card isn't much of a solution either. Many banks charge their customers 50 cents to $1 for the privilege of using their debit card in any PIN-based transaction. The American Bankers Association estimates only 13% of consumers pay these fees, but critics say the practice is on the rise and that consumers are often unaware of these charges.
1. "Good luck finding the best deal."
When it comes to gas prices, most stations are branded -- meaning the name of a major oil company hangs out front -- and must buy gas from their proprietary company. They can't shop around.
With a lock on sales, the oil companies charge each station a different price depending on various factors, such as the station's competition and its location. That means a station might have to pay a lot more than one down the street, and that cost gets passed along to you.
And you'd be wise to shop around because with prices constantly in motion, the cheapest gas may not be at the same station every time.
2. "I hate it when gas prices go up."
Stations earn, on average, 10 to 15 cents on a gallon of gas. Ironically, they earn the least when prices are highest. When fuel climbs, gas stations usually must shrink their profit margins to remain competitive, meaning they earn less per gallon.
But another big cost during tough times is something they can't do anything about: credit card fees, which add up to about 2.5% of all purchases. When gas is at, say, $2 a gallon, stations pay credit card companies 5 cents a gallon; when gas hits $3, that fee becomes 7.5 cents, at least half of the stations' average profits.
"Those credit card fees are miserable for the gas station business," says Mohsen Arabshahi, who owns five Southern California stations.
How do station owners make up for lost revenue? "Prices go up like a rocket and come down like a feather," says Richard Gilbert, a professor of economics at the University of California, Berkeley. For several weeks after wholesale prices drop, stations can earn as much as 20 cents a gallon before retail prices are lowered to reflect the change.
3. "My gas isn't better for your car; it's just more expensive."
Oil companies spend lots of money explaining why their gas is better than the competition's. Chevron's gas, for example, is fortified with Techron, and Amoco Ultimate is supposed to save the planet along with your engine. But today, more than ever, one gallon of gas is as good as the next.
True, additives help to clean your engine, but what the companies don't tell you is that all gas has them. Since 1994, the government has required that detergents be added to all gasoline to help prevent fuel injectors from clogging.
State and local regulators keep a close watch to make sure those standards are met; a 2005 study indicated that Florida inspectors checked 45,000 samples to ensure the state's gas supply was up to snuff, and 99% of the time it was.
"There's little difference between brand-name gas and any other," AAA spokesman Geoff Sundstrom says.
What's more, your local Chevron station may sell gas refined by Shell or Exxon Mobil. Suppliers share pipelines, so they all use the same fuel. And the difference between the most expensive brand-name gas and the lowliest gallon of no-brand fuel? Often just a quart of detergent added to an 8,000-gallon tanker truck.
4. "If you're smart, you'll put that debit card away."
Your debit card might be a convenient way to pay for gas, but it's a no-win proposition. When you swipe a debit card at the pump, the bank doesn't know how much money you'll be spending until you've finished pumping. So to make sure you have the funds to cover the purchase, some stations ask banks to automatically set aside some of your money: That amount can be $20 or more. That means even if you just topped off your tank for $10, you could be out $30, $50 or even $100 until the station sends over its bulk transactions, which can take up to three days. If your funds are running low, you might end up bouncing a check in the meantime, even though you had the money in your account.
Unfortunately, paying inside with your debit card isn't much of a solution either. Many banks charge their customers 50 cents to $1 for the privilege of using their debit card in any PIN-based transaction. The American Bankers Association estimates only 13% of consumers pay these fees, but critics say the practice is on the rise and that consumers are often unaware of these charges.
