Card payment processors charge the merchant some premium. Usually their contract with the merchant prevents passing the fee along to the customer. A cash discount could be a way to get more customers to pay in cash, which avoids the credit card company's cut. This is probably violating the terms of the merchant/card company contract, but I dunno, hard to resent the merchant here given the power imbalance between them and the card processors.

How would using cash would be an effective way of denying the gas station's staff a proper wage? I suspect most gas station staff is hourly, rather than... I dunno, tipped or commission.

Cash could certainly be a way of avoiding some taxes.