While local gas stations charging a $1 difference between cash and credit prices have ignited residents, a nearby station owner is saying his competitor's practice is going to hurt his business.
Several stations on Long Island owned by a single franchiser are , and a few of those happen to be Gulf stations. But Dan Ornstein, who owns three Gulf gas stations on Long Island, including one in the Hauppauge area, said is is worried people who see those high prices and associate them with all Gulf stations. For the record, on Wednesday gas at Ornstien's stations cost $4.05 per gallon in cash or $4.15 per gallon for customers paying with plastic, the standard price difference.
"It definitely impacts how we do business. Customers who go into a station like that and see a $1 discrepancy leave with a bad taste in their mouth," he said. "They don't see it's owned by a single dealer. To them, it's a brand name like Gulf or Mobil."
Ornstein fears he will lose customers to Hess, a brand that often charges one price whether cash or credit.
Michael Watt, executive director of Long Island Gas Retailers Association, called the $1 price difference between cash and credit “very peculiar and counter-productive.” Yet, it’s not illegal, he said.
“It’s illegal to charge for the use of a credit card, but it's perfectly legal to offer a cash discount,” Watt said.
Multiple attempts by Patch to speak with the owner or managers of the stations with the $1 price difference were not answered.
Both Watt and Ornstein said the practice of charging two different prices for a gallon of gas, based on whether payment’s in cash or credit, is due to slim profit margin in selling gasoline. Street competition drives station owners to a low markup, while credit card companies charge up to 3 percent per gallon on each transaction, according to Watt.
For example, Watt said if gas is priced at $4 per gallon, a station owner may be making 20 cents profit per gallon. But If the customer used a credit card, 12 cents would go to the credit card company.
“It’s really the credit card companies who are fleecing these gas station owners,” Watt said, who claimed station owners are the ones hurting as prices increase.
The matter gets more complicated for drivers who choose to pay using their debit cards. Traditionally, debit card transactions are given the cash price out of courtesy, but that may vary by station, Ornstein said.
“Whether or not the dealer chooses to have debit come out as a cash price or credit price is ultimately up to the dealer,” he said.
The only way to know for customers to be sure is to walk inside the station and ask a manager.
Watts admitted he was recently misled when he attempted to fill his car’s tank at a Mobil gas station on Sunrise Highway. Recognizing there was a fee for paying with credit, he attempted to pay using his Mobil credit card – since gas station cards are traditionally exempt from the credit mark-up at the company’s stations. Watt was still charged 10 cents extra per gallon.
State Sen. Lee Zeldin, R-Shirley, announced Wednesday that he would be seeking new gas legislation to protect consumers at the pumps.
“I am concerned that some gas stations on Long Island are getting away with charging consumers as much as $1 per gallon more for credit card than with cash. Moreover, the deceptive advertising that is happening is outrageous and has to stop,” Zeldin said in written statement.
His proposal would require gas stations charging more than a 10 cent difference between cash and credit prices to display both sets of prices on their street level displays. The senator plans to bring it before committee next month.
Until then, Watt recommended drivers gas up at stations where they know the business owner or trust the station’s business practices.