On 9/17/2012 6:43 AM, DerbyDad03 wrote:
I've been going for years without carrying too much cash, mostly
relying on my debit card. $20 - $25 was enough for the occasional low
cost purchase or to order subs at work, things like that.

Now, with gas prices being where they are, I'm noticing more and more
stations offering three cents off for cash purchases. Now I find I
have to carry close to $100 if I want to fill up and still have my $20
- $25 pocket cash.

I get 4% back on gas using my Costco Amex (no matter where I buy the gas
other than at places like Safeway or 7-11). At $4/gallon that's a
16¢/gallon rebate. I've never seen the cash price be 16¢ cheaper than
the credit price. At most Arco stations it's cash only so if Arco is all
that's around then cash is necessary.

Gasoline is a tough product for retailers because the retail price is a
fixed number of cents over wholesale, not a percentage. So a gallon of
gasoline that costs the station $1.90 and sells for $2.00 would have
credit card cost of about 4¢, while a gallon that costs the station
$3.90 and sells for $4 would have a credit card cost of about 8¢. So the
higher the price, the more of that 10¢/gallon mark-up is eaten up by the
credit card costs. That's why you're seeing the re-emergence of
different prices for cash or credit.

At Costco, the gasoline is as cheap as the cash price at the least
expensive regular station, and they only take credit or debit.

A station could increase the price of gasoline to get a higher margin
but a) it would result in lower volumes, and b) some oil companies keep
tight control of the prices their franchisees charge (if the franchisee
marks up the gasoline too much then the oil company will increase the
wholesale price to punish them, so the result is that the franchisee is
forced to stick to the margins dictated by the oil company).

Costco already cut the gasoline rebate amount for the business Amex from
5% to 4%, and I would not be surprised to see another cut.