Outrage as gas cash-credit gap reaches $1

Ronkonkoma resident John Clemente did not notice that

Ronkonkoma resident John Clemente did not notice that the gas price for credit was a dollar more, paying cash instead at this Mobil station in Hauppauge. (March 13, 2012) (Credit: Newsday/J. Conrad Williams, Jr.)

As if rising gas prices weren't enough, try this on for size: Some gasoline stations on Long Island are charging $1 more per gallon for credit card purchases -- or $1 less for cash sales, depending on how you look at it. Motorists and even some other gas retailers are unhappy about it.

State business law forbids a surcharge for a credit card purchase. But gas stations are permitted to offer a "discounted" price for cash.

Unfortunately, the law doesn't specify how to tell the difference -- that is, how deep the discount has to be for cash purchases -- or from what level. "It's crazy," said an official at the state attorney general's office, who would not be quoted by name. "But the basic fact is that, as for any other commodity, there are no price controls."

Usually, the difference in cash and credit prices is about 10 or 15 cents a gallon, according to Kevin Beyer, president of the Long Island Gasoline Retailers Association.

A difference is justified, retailers say, because credit card issuers charge gas stations a fee for each transaction -- varying from 1.3 percent to 3 percent of the price, plus a flat 25 cent transaction fee. The 1.3 percent would add 5.2 cents per gallon at $4 a gallon, for example.

But a $1 a gallon difference between cash and credit purchases, such as that posted Tuesday at a BP station on Motor Parkway in Brentwood and at several other Gulf and Mobil stations near the Long Island Expressway in communities such as Hauppauge and Medford, is a different matter. "It's really aggravating to me," Beyer said. "It gives the industry a bad name." The Brentwood station was charging $3.859 a gallon for regular gasoline bought with cash, $4.859 for credit.

Mark Cooper, director of research for the Washington-based Consumer Federation of America, said, "A dollar a gallon is absurd."

At the BP station Monday, attendants referred questions to a corporate officer who did not respond to two messages. A call to BP's U.S. headquarters in Houston wasn't returned.

At the Cumberland Gulf Group, of Framingham, Mass., which operates Gulf and Mobil stations on Long Island through franchisees, spokeswoman Carin Warner said that distributors are legally prohibited from setting pump prices.

In fairness to the BP station, Beyer noted the $3.859 cash price for regular does represent a discount from the Long Island average for regular, $4.024 a gallon Tuesday, according to the AAA. Further, said Beyer, the station in question would be justified in charging something more than the average because of its high-traffic location, just off the Long Island Expressway's north service road at Exit 55: "It's a premium location," he said. "I'm sure their rent is astronomical."

The difference between BP's cash and credit prices was pointed out by a Newsday reader, insurance agent Mark Maquire of Commack, who said he drives about 25,000 miles a year and watches prices carefully. He didn't fill up in Brentwood -- just stopped for some iced tea and noticed the signs. "Unbelievable," he said. "I said, 'Man, this has got to be illegal.' "

In August 2008, after pump prices surged to record levels, then-state Attorney General Andrew M. Cuomo -- now governor -- announced that about a third of Long Island gas stations surveyed by his office "engaged in deceptive practices, including wrongfully surcharging credit card customers."

The attorney general's office said Tuesday that none of the stations were prosecuted because the law doesn't specify how to calculate the difference between a discount for cash or a surcharge for credit.

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