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Different Cash and Credit Prices At Gas Station Dissected

by The Happy Rock on June 20, 2008

old-gas-pump.jpgJust recently my favorite Sunoco gas station in Mount Laurel New Jersey started charging different prices for buying gas with cash and credit.  Effectively, they are trying to pass along savings to consumers by charging less for cash.  My station is charging  $0.10 cheaper per gallon on $4.00 gasoline which comes out to a 2.5% discount.  I have always said there are benefits to paying cash, but this wasn’t the way I was expecting to see them realized.

At first I was really frustrated as it seemed they have effectively crushed all but the best cash back credit card rewards.   I still get 3 percent back on all gas purchases, so I still come out 0.5% ahead.  That drops my cash back from $108 dollars a year to just $18. It’s still better than paying cash, for now. 

It also helped to realize that they didn’t raise the price of gas for credit card users, since they are still competitive with other stations.  Before this companies already priced in credit card fees so that they could keep a uniform price.   Now lawmakers and consumers want the cheapest price possible.

Usually businesses went to help people spend using credit cards since people are willing to by more when using plastic, so this may actually work out for consumers.  I suspect it won’t do much though since the demand for gas doesn’t change much with high prices.  People will continue to charge away.

{ 5 comments… read them below or add one }

aroD June 20, 2008 at 6:57 am

I just hope that this strategy doesn’t attract law breakers especially now that crime rate is higher than usual.

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Michelle June 20, 2008 at 2:05 pm

Actually, I recall that many gas stations did this even when I was a kid in the 1980’s. (During the 2000’s I’ve even seen stations that don’t take credit cards, but this was mainly in middle-of-nowhere Iowa.) Then, as you note, business started incorporating their merchant fees into the price.

Also, as far as I know, crime is still down compared to the 1970’s and 80’s in the USA; I know it’s been trending back up since 2004, but can we really yet say it’s “higher than usual”?

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Will June 21, 2008 at 12:31 pm

Rock,

It’s been awhile since I commented. I think the lagality of what they are doing might be called into question. It is actually illegal to pass on credit card charges to the consumer. Now since they are wording it as a discount it may be positioning itself as legal. I wouldn’t be suprised to see credit card companies challenge the legallity of this if it becomes wide spread.

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spillingbuckets June 25, 2008 at 9:51 am

I just noticed this at the local gas stations here too. I don’t think it will change my habits much though – I don’t usually carry enough cash ($50ish) to fill up my tank.

NJ Gas prices are at $4 a gallon now too… I used to love going to NJ for “Cheap Jersey Gas” when I lived in Connecticut.

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The Happy Rock June 26, 2008 at 9:33 am

@spllingbuckets – Yep $4 pretty much everywhere, although in New Jersey you can’t pump your own gas…that still bugs me.

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