May 10, 2011
The Honorable Richard Durbin
United States Senate
Washington, DC 20510
Dear Senator Durbin:
Our associations represent virtually every part of the retail industry selling motor fuels in
the United States. Like many Americans, we are concerned about the price of gasoline today. Not only are rising prices bad for our customers, but when the price of gasoline rises, retailers make less money. That might not make sense at first glance, but the retail sale of gasoline is extremely price competitive. Retailers put their prices on large signs that motorists can see as they drive. Studies have shown that customers will drive out of their way just to save one or two cents per gallon. As a result, when the wholesale price of gasoline rises, retailers cannot raise prices to consumers fast enough to keep pace.
This is one of the many reasons why the swipe fees paid by our industry are so offensive.
Swipe fees are fixed centrally by the credit card giants for both debit and credit cards as a fixed fee plus a percentage of the transaction. That means the fee retailers pay to sell gasoline goes up every time the price of gasoline goes up. While gasoline retailers make less money on rising prices, they pay higher and higher fees. That simply is not fair.
With gasoline nearing $4 per gallon, debit swipe fees average about 6 cents per gallon –and credit swipe fees are about 8 cents per gallon. Our customers worry about every extra penny they pay for gasoline and 6 to 8 cents extra is far too much money. To put these huge fees in perspective, consider that every penny per gallon change in the retail price of gasoline costs consumers an additional $3.75 million per day or $1.38 billion each year.
The surest and swiftest way to reduce gas prices, however, is to let the Durbin amendment and the Federal Reserve’s rule implementing it take effect on time. Doing that will reduce the fees gasoline retailers pay, and the EIA definitively concluded in a 2003 report that gasoline retailers pass through 100 percent of cost reductions in the form of lower gasoline prices. That means lower debit swipe fees will lead to lower gas prices.
Senator Tester’s bill (S. 575) would do the opposite. It would stop swipe fee relief for two years and keep pushing up gas prices. That same 2003 EIA study found that cost increases get passed along in the form of higher gas prices. Therefore, a vote for S. 575 is a vote for two years of higher gas prices than anyone should be paying.
There are many reasons why reform is needed now to limit the price-fixing by credit card giants and banks on debit swipe fees. While some of those reasons might be subject to debate, it is hard for any of us in the business of gasoline retailing to understand why – given the pricing pressures we and our customers all face today – any Senator would vote for two years of higher gas prices when some relief is only a couple of months away. We urge you in the strongest terms to vote against S. 575, a bill that will keep gas prices too high.
NACS – National Association of Convenience Stores
NATSO – National Association of Truck Stop Operators
PMAA – Petroleum Marketers Association of America
SIGMA – Society of Independent Gasoline Marketers of America
P&CMA – Petroleum & Convenience Marketers of Alabama
APMA – Arizona Petroleum Marketers Association
AOMA – Arkansas Oil Marketers Association, Inc.
CIOMA – California Independent Oil Marketers Association
CWPMA – Colorado Petroleum Marketers and Convenience Store Association
ICPA – Independent Connecticut Petroleum Association
FPMA – Florida Petroleum Marketers & Convenience Store Association, Inc.
GOA – Georgia Oilmen’s Association
HPMA – Hawaii Petroleum Marketers Association
IPM&CSA – Idaho Petroleum Marketers and Convenience Store Association
IPMA/IACS – Illinois Petroleum Marketers Association/Illinois Association of
IPCA – Indiana Petroleum Marketers and Convenience Store Association, Inc.
PMCI – Petroleum Marketers & Convenience Stores of Iowa
PMCA – Petroleum Marketers and Convenience Store Association of Kansas
KPMA – Kentucky Petroleum Marketers Association
LOMACS – Louisiana Oil Marketers and Convenience Store Association
MODA – Maine Energy Marketers Association
MPAMACS – Michigan Petroleum Association/Michigan Association of Convenience
MAPDA – Mid-Atlantic Petroleum Distributors’ Association
MPM – Minnesota Petroleum Marketers Association
MPMCSA – Mississippi Petroleum Marketers & Convenience Stores Association
MPCA – Missouri Petroleum Marketers and Convenience Store Association
MPMCSA – Montana Petroleum Marketers and Convenience Store Association
NCPA – Nebraska Petroleum Marketers & Convenience Store Association
NPM&CSA – Nevada Petroleum Marketers & Convenience Store Association
NEFI – New England Fuel Institute
IOMANE – Independent Oil Marketers Association of New England
FMANJ – Fuel Merchants Association of New Jersey
NMPMA – New Mexico Petroleum Marketers Association
ESPA – Empire State Petroleum Association, Inc. (NY)
NCPCM – North Carolina Petroleum & Convenience Marketers
NDPMA – North Dakota Petroleum Marketers Association
OPMCA – Ohio Petroleum Marketers & Convenience Store Association
OPMCA – Oklahoma Petroleum Marketers & Convenience Store Association
OPA – Oregon Petroleum Association
PPMCSA – Pennsylvania Petroleum Marketers & Convenience Store Association
SCPMA – South Carolina Petroleum Marketers Association
SDPPMA – South Dakota Petroleum and Propane Marketers Association
TFCA – Tennessee Fuel & Convenience Store Association
TPCA – Texas Petroleum Marketers and Convenience Store Association
UPMRA – Utah Petroleum Marketers and Retailers Association
VFDA – Vermont Fuel Dealers Association
VPCGA – Virginia Petroleum, Convenience and Grocery Association
WOMA – Washington Oil Marketers Association/Pacific Northwest Oil Heat Council
WPMA – Western Petroleum Marketers Association
&GA – West Virginia Oil Marketers and Grocers Association
WPMCA – Wisconsin Petroleum Marketers & Convenience Store Association
CWPMA – Wyoming Petroleum Marketers and Convenience Store Association