Bankruptcy & Foreclosures

As a society we rely pretty heavily on the latent energy stored in a gallon of gasoline. For many of us, it’s simple to simply pull up to the pump, swipe our card in the reader, and fill up the tank. Believe it or not, using your credit card could be contributing to the record-high gas prices of late.

How so you wonder? The ability to accept a credit card isn’t a business freebie. In fact card issuers whack businesses with fees (usually in the form of a percentage of overall sales). Obviously since it would bad business to charge more per gallon just to individuals looking to use a credit card, these fees are made up by all of us; whether we pay with cash, credit, or debit. The gas station has no choice but to add a few cents per gallon to compensate for the fees they’re being charged.

According to Triple A, these fees can be as high as 7.5 cents per gallon! With a national average approaching $3.80 per gallon, every cent counts.

And speaking of the current crisis, gas prices approach a 20% rise this year alone and now Congress is finally asking the question, why is this happening? One week ago today House leaders sat down to hear testimony from consumer advocates, energy industry analysts, and truckers in effort to collect some answers.

Not surprisingly, they concluded that a majority of gas price increases could be attributed to crude oil’s dramatic price spike. More good news is that at the time of the meeting, crude was trading for $123.56 a barrel and analyst predict oil could rise to some $200/ barrel over the next six months to two years. Ouch!

Much of the heat, passion, and blame from both consumers and politicians alike has been aimed at the oil companies themselves. And perhaps with good reason too. While the oil companies claim they have no control over the cost of Middle Eastern-exported crude, the facts do still remain: Rising oil prices have helped drive up food costs, lowered trucking, refining, automaker and airline profits, and has actually changed individual driving habits, the oil industry has enjoyed record profits in the past few quarters. It’s tough to argue with facts that are so black and white.

So what, then, does the oil industry say in their defense? They say simply that as demand for oil and petroleum products rise globally, production costs naturally increase and oil becomes a rarer commodity. Fair enough, I suppose but what’s the solution? Some believe that taxing these companies (or at least closing up some of their tax benefits) would somehow benefit the consumer but Big Oil has that threat safely covered as well. After all, they say, how would charging us more lower the final cost to the consumer?

Good point.