​High gas prices might seem good financial news for service stations - but that's not exactly the case

For starters, Executive Director of the Minnesota Service Station Association, Lance Klatt, says many people don't realize the amount of fees, including credit card fees, the businesses pay. And that takes a cut right out of their bottom line.

"So you get the over $4 gas, you're looking at credit card fees roughly around 12 cents, 13 cents a transaction plus another fee on top of that," says Klatt. "So a lot of these stores are paying around anywhere from 18 to 20 cents per gallon on credit card fees."

Klatt says a gas tax holiday, something some states have already implemented, and President Donald Trump proposed at the federal level, may be nice to have, but businesses and consumers would likely pay for it in the long run.

Klatt, speaking to the WCCO Radio Morning News with Vineeta Sawkar, adds that there's likely no relief for drivers on the horizon. He adds service stations have no say in the price of gas, and increasing prices of fuel don't add any profits for them.

"You know, local businesses are the backbone of our economy," he says. "I feel that way. A lot of people feel that way. I just think it gets to be more challenging, and we need to pull back here and keep in mind if there's a federal gas tax holiday, nothing's free in life, right? So eventually it may be nice to have today, but we'll probably pay for that in the long run."

Klatt adds that high prices also keep drivers off the roads more often, and keep them from filling up their tanks as often. That has a trickle-down effect which keeps them outside of gas stations, where food and beverages are where they make the bulk of their profits.

Labor Department figures showed that gasoline prices are up more than 28% compared with a year ago. However, the AAA motor club listed the average regular gallon of gasoline above $4.50 on Tuesday, about 44% more than it cost last year at this time.

After the United States and Israel attacked Iran on Feb. 28, Tehran closed off access to the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas passes.

The oil shock shows no sign of letting up. The International Energy Agency warned Wednesday that the “mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace.’’ Since February, global oil supplies have been reduced by 12.8 million barrels a day in what the IEA called “an unprecedented supply shock.’’

Wednesday’s report on producer prices showed a big uptick in shipping costs. The wholesale cost of truck transportation of freight shot up more than 8% from March and air freight rose 3.6% for the month.

“Diesel fuel is also crucial for food prices, as it powers farm equipment along with commercial shipping and trucking,” wrote Grace Zwemmer, US Economist at Oxford Economics. “Food prices rose by a muted 0.2% in April, much stronger than the 0.6% decline seen in March, and it’s possible they will face upward pressure from higher fuel prices the longer the war persists.”