PFT #83 - Personal Finance Tip of the Week: Gas Gouging

In times when inflation is rising, we experience higher prices for our goods and services as well as shortages.

For example, In the grocery store, we’ve experienced products in limited supply from toilet paper to baby formula. When a desired product is available, it is emptied as soon as it was stocked.

When it comes to gasoline, supply chain disruption was experienced in 1973 and 1979.
This also occurs during natural disaster situations where shortages shoot up prices and then we hear about gauging.

To make things clear, gauging does occur; however, there is a large misinformation notion that gas stations drive up their prices because they have us over a barrel.

For the most part this is not true as our research on average tells us that most retailers make 15 cents per gallon after the consumer pumps it.

To make things worse, most people pay via a credit card which has a merchant fee around 2.5%. Hence, when the price per gas is at just $4, the retailer pays 10 cents and in our example would profit just five.

This is why we see a cash price listed on the signs that are lower than the credit price. Hence, if you have cash, this is another way to keep a few bucks in your pocket especially during long stretches.

The bottom line is this is another way to save a few more dollars, yet the hidden point in this finance tip is when we understand how things work, we can accept things that we don’t like.

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Episode Transcript

(00:04):
Hello everyone, I am David andyou were listening to the Personal Finance Tip
of the Week and this week's topicis about the gas prices and the midst
of gauging. In times when inflationis rising, we experience higher prices for
our goods and services as well asshortages. For example, in the grocery

(00:28):
store, we've experienced products and limitedsupply from toilet paper to baby formula.
When a desired product is available,it is emptied as soon as it was
stocked. When it comes to gasoline, supply, chain disruption was experienced in
nineteen seventy three and nineteen seventy nine. This also occurs during natural disasters where

(00:50):
shortages shoot up prices and then wehear about gauging. To make things clear,
goujing does occur. However, thereis a large misinform nation notion that
gas stations drive up their prices becausethey have us over a barrel. For
the most part, this is nottrue, as our research on average tells

(01:11):
us that most retailers make fifteen centsper gallon after the consumer pumps it.
To make things worse, most peoplepaid via a credit card, which has
a merchant fee around two and ahalf percent. Hence, when the price
per gallon US had just four dollars, the retailer pays ten cents and in
our example they would have a profitof just five cents per gallon. This

(01:34):
is why we see a cash pricethat is listed on the signs that are
lower than the credit price. Hence, if you have cash, this is
another way to keep a few bucksin your pocket, especially during long stretches.
The bottom line is that this isanother way to save a few more
dollars. Yet, the hidden pointin this finance tip is that when we

(01:57):
understand how things work, we canaccept things that we don't like. So
that will do it for the personalfinance tip of the week. Until next
time, I am David