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FARAI CHIDEYA, host:

This is News & Notes. I'm Farai Chideya. Some of us wake up every morning and wonder, what will the gas pumps say today? Crude oil hits new highs as it closes in on 140 dollars a barrel. But how does that number translate into consumer gas prices? The national average price for consumers is a record four dollars and eight cents per gallon. And prices at the pump are expected to keep climbing. But what else should you look for before filling up the tank? To help us answer this we have economist Keith Reed. He's a reporter for the Cincinnati Inquirer Enquirer and writes a finance blog for BET called, "Dollar Out of 15 Cents." Hey, Keith.

Mr. KEITH REED (Economist, Blogger, BET's, "Dollar out of 15 Cents"): Hey, Farai, how are you doing?

CHIDEYA: I am doing great. So it seems like every morning the signs for gas prices are a couple cents higher than the night before. So are we going to see five dollars a gallon gas?

Mr. REED: I think it's possible, there's no way of really knowing. Of course, the price of a gallon of gasoline is going to depend on a number of factors. The number one factor is obviously is going to be the price of crude oil, which really hasn't let up in its long-term increases over the last, about two years. Then you're going to start to look back and see what happens with the weather, what happens with even terrorism and how the countries are - and what I mean by (unintelligible) by weather, if you think back to Hurricanes Katrina and Rita that threw some of the production facilities in the gulf off-line, if you don't have the ability to do the refining, then you see some increases in the production cost and therefore that's reflected. You've got to look forward about the geopolitical situations in other countries when you look at some countries in Africa, when you look at some countries in South America that supply some of the oil we get. And obviously, you always want to be worried about what's going on in the Middle East. Any hurricanes, any terrorist attacks, anything of that nature could affect whether or not these gas prices continue to rise. And even absent many of those special events we've seen for the last two and a half years, just a consistent rise in the cost of crude oil, so I don't know that there is any relief coming in these prices any time soon.

CHIDEYA: You have been doing some interesting work on this whole gas issue including issues like theft. Why don't you talk to us a little bit about some of the things you've seen.

Mr. REED: This morning, I posted on my blog a good quick post based off a Newsweek article that someone emailed me talking about the actual increase in theft of gasoline. What do I mean by theft? There was actually one anecdote that they used of a situation where two men pulled up to a gas pump, tinkered with it, waited until somehow they figured out how to get this started without using a credit card, without using cash. Got this the pump started, and then a few minutes later a line of cars pulled into the gas station and everybody started filling up their pumps and paying the guys who had hijacked the machine itself. It sounded like something out of a movie. It was a very organized operation, but you are seeing this stuff starting to happen more and more. Both on a very organized level and just with individuals. People will pull into a gas station, they won't pay for the gas, there are still gas stations that are out there in some sections of the country, especially in the Midwest and even the South, where you can pull into a gas station, pull up to the pump and not pay before you get the gas. And so if you are not paying before you pump, you can leave, theoretically before you pay, without paying for the gas and get away with it, and you are starting to see that more and more.

CHIDEYA: What about issues like credit cards and debit cards? There are all sorts of rules. And I know that I've learned about a couple of them only as I've made my way up to the little Plexiglas booth. So, tell us what's going on with those.

Mr. REED: Well, here's the deal. If you are a carrying a debit card that has a Visa or MasterCard symbol on it, when you go to use that card, whether you're at a store or a gas pump, if you choose debit there's always a fee associated with one of those cards. Now they will ask you debit or credit. If you say debit, you pay the fee, if you say credit, the gas station or the retailer pays the fee. When people are paying for gas with their credit cards, it is costing that gas station a percentage of the cost of that gallon of gas to pay Visa or MasterCard or whoever the card issuer is for that transaction.

What that means is that their costs are going up as the price of gas is going up. And in most cases, when you are dealing with a gas station that is also a retailer, which means that they are - it's a convenience store operated that actually also sells gas. Gas is considered a loss leader, meaning they lose money on the sale of every gallon of gas that they make, but they only have gas there to get you to come into the store. So they are already losing money. Now they are losing more money because people are walking up, they are paying for gasoline with credit, because they don't have cash, or they are choosing credit because they know they don't want to pay the fee on that debit card and that is starting to cost more and more money. So some of these gas station operators are actually starting to put more restrictions on the use of your credit card, or your method of payment when you buy gas at their station.

CHIDEYA: Now what would the downside of that be?

Mr. REED: Well, first and foremost, some of them are starting to ban outright, are starting to put a limit on how much gas you can buy when you use that credit card. That's going to be the most immediate impact of this, if you walk up to the gas station and they say, you can't pay with credit anymore because it's costing us too much to pay for your transaction. If you're using a credit card. In some other instances, they are simply tacking on a surcharge. You may pay a different price at that gas station if you buy the same gallon of gas at the same grade with cash as opposed to using an actual credit card.

CHIDEYA: So does that mean that right now cash is really what you should be headed for? Because I know a lot of time, you know, for example, there are for examples affinity cards that promise you everything from a clock radio to airline miles if you use a credit card. And if you are someone who sues uses your credit card responsibly, you can maybe get a vacation out of it. But it sounds like that may not be - the gas station may not be a place to add to your miles or whatever it is you are getting.

Mr. REED: Well pay attention to the terms of your credit card and pay attention to the terms of your purchase. A lot of times these gas stations that are putting in some new rules are carrying making exceptions for carrying their own affinity cards. So if you're using - obviously if you go to an Exxon gas station and you are carrying an Exxon credit card or a BP station and you are carrying a BP card, they don't want to discourage you from using that card that they are actually getting some money off of the interest from. So then they won't put that restriction on. But you always want to know the terms under which you are making the a purchase on credit regardless, so of what you are buying and where you are buying it.

CHIDEYA: Now, what about gas prices internationally? You know, we've talked a lot about what is going on in America. But sometimes if you read about what people pay in other countries, you will be kind of amazed and get a whole second wave of sticker shock. So what are some of the gas prices in developed western Western countries, for example?

Mr. REED: If you were to go to any of the European Union countries right now, not having checked their prices this morning so I can't give you a quote, but I can tell you that for the longest time they have paid much more than we pay for gasoline here in the United States. And they continue to do so, which is why in some parts you see some of these nations have a much more intricate system of rail, for example, and that's just something you are hearing talked about more and more here in the United States as the cost of gas goes up. But in many European nations and many developed western Western nations there they are already - outside the United States, they are already paying far more for gas than we are. And some of this is sort of, to them, it's like yeah right Americans, come on, you pay so much less for gas than we already do. Give me a break. We don't really care how much you pay for gas.

CHIDEYA: It's a little bit of a chicken and egg, though, with public transportation because here in the U.S. there may be people who want to take public transportation but they don't have access and so they can't even go about - you know, they are too far, for example out in the suburbs or exurbs or rural areas to really make use of it, and therefore have to pay those high gas prices. Isn't that true?

Mr. REED: That is true. Story on "CNN Money" this morning actually talked about that, that phenomenon of people considering or actually moving to be closer to where they work because they are doing so much commuting and I've blogged about this. Again I moved seven months ago from Boston to - which is a city which has a pretty efficient subway - to Cincinnati, which is a city that really has no significant public transportation to speak of. I mean there are buses but that really is so much different from having a subway system. And here, the difference in what you pay to drive is not only going to be in the cost of that gallon of gas but in how much you have to pay just to get to and from work, because Midwestern cities and Southern cities and cities out on the West Coast simply were not built for commuters in the way that Northeastern cities were. There are no subways, there aren't public transportation bus system, inner-city rail, all of those things simply don't exist in an the interior, or in the western corridor of the 48 states, so you're out here, now you're paying four dollars a gallon for gas where it was just over a dollar not that many years ago.

You're paying almost three times as much as it is for gas, and you have to drive everywhere. It's almost unimaginable to somebody who grew up and who lived in East Coast cities for most of his life like I did. And you can't - now you live out here, and you've got to pay so much more money for gas. It makes you consider whether or not you want to move downtown, you want to live - do you really want to live 20 or 30 miles from work and make that drive to and from every day with gas being four dollars - more than four dollars a gallon?

CHIDEYA: And there's parking so often when you get to work. There's something else going on that is really interesting, which is that car companies are changing the models that they're making and discounting the models on the lots as well as used car dealers sharply discounting the models there. So what do you see ahead on that score?

Mr. REED: Well, what's essentially happening is, this is the ripple effect. The price of gas has gone up to the extent that people simply aren't interested in SUVs. One big barometer, I think, that people have always talked about, some economists have talked about and people who follow the auto industry, has been when people get sick of driving gas-guzzlers in this country, then we'll know that gas simply costs too much. And we're starting to reach that point. There are huge waiting lists for hybrids. And not in more liberal states, where people are concerned with being green, but in, again, in some of these Midwestern and in some of these Southern states, where people by and large don't really worry about the environment so much. They're concerned about how much they're paying. It's hitting their pocket books. Well what does that mean?

That means that GM wants to get out of the business of selling a gas-guzzler like the Hummer. They're considering cutting that model completely from their production line. It means that if you are going to buy a used car, and so many people bought these big gas-guzzlers, these big SUVs that get, you know, abysmal gas mileage, abysmal miles to the gallon, that you walk into a used car dealership, they can't move that car so they're offering you an incentive. They're giving you a gas card, they're giving you a year's worth of fill-ups on them, just because they need to be able to move that inventory off the lot and bring in something new.

CHIDEYA: Keith, always good to talk to you. Thank you.

Mr. REED: Thanks, Farai.

CHIDEYA: We've been speaking with Keith Reed. He's a reporter for the Cincinnati Enquirer, and blogs for BET's finance page, "Dollar Out of 15 Cents". He joins us from member station WGUC in Cincinnati, Ohio.

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