The Cash or Charge Gas Dilemma

It's funny, I meant to do a blog post about this a few days ago, but the L.A. Times actually beat me to it. If you haven't noticed, an increasing number of gas stations are pricing gas slightly cheaper for motorists paying by cash. Some stations -- particularly the Valero outlets -- have even changed their signs to show side-by-side the cost of cash vs. credit.

I tend to get my gas via credit card because it's easier -- which means I usually avoid cash-only spots like Arco, even if it's a few cents cheaper. But now that more gas stations I do frequent, like the Valero location on Virgil near Santa Monica Blvd. (hint: one of the consistently cheapest gas stations in Los Angeles), are offering discounts if you pay by cash, I may have to dig into my pocket anyway.

As the Los Angeles Times writes, gas stations pay a hefty fee for every credit card transaction -- and they're now trying to wean drivers off the plastic:

In 2006, motorists -- whether they used cash, credit or debit cards -- paid an average of 4.2 cents a gallon more because of credit card fees, said Jeff Lenard, spokesman for the National Assn. of Convenience Stores, which represents outlets that sell about 80% of the nation's fuel.

Fees have been a perennial sore point with all retailers. Complaints have grown louder because money collected through card fees has more than doubled since 2001, and rewards programs have convinced people to use their cards for everyday purchases.

For gas stations, soaring prices have magnified the percentage-based card costs and caused more and more customers to pay with plastic.

"What's happened is a double-whammy," said David Robertson, publisher of the Nilson Report, a credit industry newsletter.

Members of the convenience store group, which has sued credit card companies over the fees, paid $6.6 billion in credit card fees last year -- and booked $4.8 billion in profits, Lenard said. "The credit card companies made more at our stores than our store owners," he said, noting that most of the profit from gasoline goes to the refiners rather than service stations and convenience stores.

My main problem: Now that it costs nearly $40 to fill up the tank in my CRV (12 gallons), I gotta depend on my credit cards. I rarely carry that much money in my pockets. And paying all the fees to use the gas station ATM sorta defeats the purpose.

(Pic credit: L.A. Times)