Gas Retailers Not Profiting from Durbin Amendment
April 24, 2012
A recent study claiming U.S. gas stations are saving $1 billion per year after implementation of the Durbin Amendment limiting debit interchange shows “an immense ignorance of the fuels market,” according to the National Association of Convenience Stores (NACS), a national trade group representing convenience stores and gas retailers. The study, commissioned by the Electronic Payments Coalition, a lobbying group for Visa, MasterCard and the banks that issue their cards, says gas retailers are not passing that savings on to consumers.
NACS, however, says the study is based on simple arithmetic that shows a lack of understanding about what causes high fuel prices and whether retailers even profit from them.
“When prices rise, retailers usually cut margins because they want to remain price competitive even if their wholesale costs increased,” says Jeff Lenard, vice president of industry advocacy for NACS. “Data from OPIS shows that the average national markup (gross margin) for gas was 13.0 cents per gallon over the first quarter of the year. We estimate that expenses to sell gas are around 15 cents per gallon, so average retailers experienced an entire quarter where they lost money selling gas.”