[repost from May 29, 2006 - Timely commentary in advance of U.S. Independence Day's peak holiday travel]
A dire projection from Goldman Sachs' senior executive suggests that a serious disruption to oil supplies could deliver soaring prices as high as $105 a gallon. While this will further wreck the economy and the oil markets, we think credit card companies will prosper.
Even at current record levels, consumers are wondering why the banks are permitted to flood their vaults at the expense of motorists from service station interchange fees that are based on a percent of the sale. Even greedy home realtors have lowered their rates as housing prices have doubled and tripled. Today it is common to have realtors negotiate and introduce sub-six-percent traditional fees, yet the credit card associations have their rates fixed. And, when motorists unsuspectingly use a debit card and it gets recorded as a credit card, a whole new level of excess is uncovered at the pump. Rather than paying a flat fee, even though funds are instantly deducted from a debit card account, if it is transacted as a credit card, the merchant pays a much higher rate.
During the energy crisis last fall, we contacted the CEO's of Visa® and MasterCard® urging them to rescind interchange fees at service stations.
Since last Labor Day, as American's again prepare for another peak holiday driving season, this Memorial Day Weekend boasts another opportunity to question why the two leading credit card companies (and now the new additional MasterCard® shareholders) are profiting with record interchange fees when motorists fill up? Why are credit card companies earning more than the service stations?
As gas prices double, seemingly, so are credit card merchant interchange fees - and then some. As it costs upwards of sixty dollars to top off a cars tank, consumers are more inclined to pay with credit; they often don't otherwise have enough cash as they did when it cost twenty or thirty dollars for gas. This means, the banks' windfall profiteering is accelerated and enhanced at the expense of drivers across the nation.
[source: WayTooHigh.com]
