You may not know this, but preauthorization charges are standard when you buy gasoline at most gas stations. They go unnoticed by many since they’re around $1 and are usually there to confirm the credit card’s validity. However, recently gas stations have started putting preauthorization charges of $175 onto credit cards, causing overdraft fees.
Gas prices rise to unprecedented highs
Gas prices have recently risen to unprecedented highs. According to data from the EIA, prices have been on the rise since the beginning of this year. In January, gas was $3.413 per gallon, which is relatively standard. It crossed the $4 mark in March, reaching $4.322 per gallon. Then, the prices reached $5.032 per gallon in June.
For reference, the average monthly prices have never been this high. Before, gas prices peaked in July 2008 at $4.114 per gallon. These prices and gas theft have led gas stations to change their policies.
$175 holds on gas resulting in overdraft fees
As mentioned, gas stations used to charge around $1 to check if the credit card was valid. Now, according to The Drive, gas stations have started putting holds of $175 on accounts.
Technically gas stations can make the preauthorization charge whatever they would like, but credit cards put a ceiling on the amount gas stations can charge, which is $175. It used to be $150, but credit card companies increased this amount as gas prices rose.
Gas stations are doing this to ensure the card can cover the maximum amount of gas they can purchase. Those without enough credit will have their card declined, forcing them to pay in cash or with a different card.
The main issue with this is that some consumers only have money for the amount of gas they intend to buy. If someone only had $50 set aside for gas, their bank or card may charge them an overdraft fee depending on their policies. In addition, people with poor credit may not have a high enough limit for the $175 charge, especially if they already have pending bills.
What causes high gas prices?
- Russia’s war on Ukraine
- U.S. oil companies are scaling back production in fear of stricter environmental regulations
- Lack of equipment
- Hiring challenges
- Ongoing supply chain issues
- Oil companies are focusing on raising share prices rather than increasing production
- Refiners are shifting to focus more on diesel and jet fuel
- Employees returning to the office
- People going on vacations again
All in all, it’s far from a single cause leading to these price increases, so it will take solutions on multiple fronts to resolve it—both political and economic.
Gas prices are going down slightly
While the gas crisis may seem difficult to resolve given all the factors causing it, there is still a glimmer of hope. Recent statistics have shown that gas prices are dropping slightly, according to AAA data.
As of July 10th, they are still high in the west, particularly in California, which has an average gas price of $6.097. Regardless, national prices are dropping below $5 and are $4.684. Data from previous weeks and months show a steady decline in prices.
There is no guarantee how prices will fare in the coming months, but here’s hoping this decline will bring us back to normalcy.