Gas stations prepare for cash discount bill

June 13, 2008 5:21:29 AM PDT
Now that the state legislature has passed a bill designed to make it easier for gas stations to offer discounts to motorists who pay cash, the state's gasoline retailers association says it may take until late July for those prices to drop. "Don't look for this to happen overnight," Michael Fox, executive director of the Gasoline and Automotive Service Dealers of America, said Thursday - hours after the proposal passed during a special session of the General Assembly.

"I can't get signs fast enough. I've got to really make sure we roll it out correctly," said Fox, adding how his association is also working with stations on new security procedures to handle the additional cash.

If Gov. M. Jodi Rell signs it, the new law would take effect immediately. Rell supports the concept, but hasn't said whether she'll sign the bill, which includes other provisions such as the cancellation of a July 1 increase in one state gas tax.

Attorney General Richard Blumenthal was optimistic that many of Connecticut's approximate 1,000 gasoline retailers will quickly begin dropping prices for people who pay with cash.

"I can't tell you what gas station owners are going to do, but, my guess is some of them will be out there this weekend, potentially (offering cash discounts)," he said.

The bill passed by lawmakers overrides any provisions in franchise agreements between gas station owners and the oil companies that may prevent retailers from offering discounts for cash purchases. It would be up to each retailer to decide whether to offer a lower cash price.

A call was left seeking comment with Steven Guveyan, executive director of the Connecticut Petroleum Council. His trade association, which represents oil companies and refiners, hadn't taken a position on the cash discount bill.

"The statute makes clear, the existing statute, that if a dealer wants to offer a discount, he can do it today," Guveyan said in 2006. "The statute says that he can do it and I'm not aware of anybody on our side objecting to it."

Estimates vary on how much drivers could save at the pumps if cash discounts are offered. Anywhere from 10 to 20 cents per gallon have been predicted. Blumenthal believes some stations will slash gas prices to coax customers inside their stores to buy other things.

"A lot of gasoline stations no longer look to the gasoline pump as their primary source of profit," he said. "So if gasoline becomes in effect a means of attracting customers to buy candy bars or cigarettes or soda, they may in effect be willing to reduce that margin, splash the cash discount ads across the front of their stations and try to attract more business."

But Blumenthal stressed that it's unclear how successful the cash discount concept will be in reducing fuel prices. He predicted that lawmakers will likely have to convene another special session to address high fuel costs at some point.

"We may well need to do it if we continue to see skyrocketing and spiraling prices," Blumenthal said.

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