High Gas Prices: Should You Blame Your Bank?
(NEW YORK) -- Should you blame your bank for high gas prices? A new report out Tuesday says it’s not just supply and demand and Middle East politics that determine the price of a barrel of crude; Visa and MasterCard and the other card companies share some of the blame for the high price of gasoline, the report said.
The new report by the National Association of Convenience Stores says it’s those so-called swipe fees at gas stations. That’s the fee that stores have to pay credit card companies every time a card is swiped. (Congress took aim at those fees for debit cards, but not credit cards.) According to the report, when gasoline is $4 a gallon, about 7 cents of that can be blamed on swipe fees. At $4.50 a gallon, the fee rises to 7.6 cents. That swipe fee, which is partly a percentage of the sales price, goes up with the price of gas.
In the grand scheme of things, swipe fees don’t represent a huge portion of the price. By some estimates the recent jump in gasoline prices has added only an additional $30 a year to the average driver’s fuel bill. But convenience stores, which sell a lot of gasoline, point out that folks will drive a great distance just to save a few cents a gallon. They also say that these hidden fees get passed on to every customer, even those paying cash, because it’s a cost of doing business.
The credit card industry, as might be expected, begs to differ. In a statement, Ken Clayton, an executive vice president with the American Bankers Association, told ABC News, “Once again, the convenience store lobby wants something for nothing. They want to continue enjoying the benefits of our nation’s payments system -- from lower costs to fraud prevention -- without paying for it or providing lower prices to their customer base. This ‘report’ is really about convenience stores seeking government price controls that pad their bottom lines, leaving consumers to pick up the tab while they rack up additional profits.”
Jeff Leonard, the vice president of Industry Advocacy for the National Association of Convenience Stores, argues that the bankers’ group “isn’t taking into account the reality of gasoline retailing.” Lower swipe fees would get passed back to consumers, because the price at the pump is so competitive, he said.
“The goal is to lower the price of gasoline and get them in the store,” he added.
Clayton, of the banker’s association, points out that swipe fees are a small part of the retail price, “Gas prices are driven by Middle East instability, gas refinement costs, and the broader issues of supply and demand. It’s time the retail lobby recognizes that and stops making up arguments driven by their own self interest.”
As for consumers, they’re just glad prices seem to be inching down from the recent record highs.
Copyright 2012 ABC News Radio