My vehicle ('06 Honda Civic SI) can only run right on premium. When regular was close to $3.70 a year or so ago here, the markup on “plus” (89 octane) and premium were typically 22-25 cents each (so $4.14-$4.20 for premium in my example).
So fast-forward a year, and for the most part the plus/premium markups are STILL the same that they were before. So while the drop in regular in my area, in percentage terms, is a nice hefty 42% or so, the drop in the price of premium is only c. 36%.
Is there a technical reason for the markup? Or is it just the local station managers setting the prices lazily without reducing the markup in accordance with the overall price drop? If they did, the markup should be 15 cents per level or so now-I can find a few stations where it is 19 cents if I am lucky, but most are still in the 22-25 cent range.
I find it hard to believe that a honda civic will only run on premium gas.
What has likely happened is you’ve been running it long enough on premium gas unnecessarily that the combustion chambers have carbon buildup and that has increased the compression ratio, which means now, that it will only run on premium gas.
Don’t run premium gas in an engine that doesn’t require it.
The Honda Civic SI has required premium gas for at least the past decade. The engines are higher compression than the regular Civics.
And to answer the OP, premium gas is less of a commodity, or at least consumers perceive it that way. It’s probably less price sensitive than regular gas.
Other observation: mid grade used to be $0.10 higher then regular, and premium $0.10 higher then that when gas was in the $1-$2 range. No matter what it was the standard.
Then gas went crazy into the $3-$4 range and for quite a while the high and mid grades were still 10 & 20 cents higher. I was wondering what was added that didn’t increase the cost per gallon that didn’t increase with the cost of gas.
After a while the cost of mid and high did start to creep up and break this 10 and 20 cents pattern and does seem to defy the price dropping.
If the additives stayed the same price, then the difference between regular & premium should stay the same, since that reflects the cost of the additives.
What I’ve seen is the regular goes down a lot and the premium goes down a little. So the difference goes up a lot.
For me, as long as I can remember, the 3 tiers of gas have always been 10 cents apart. For example, today regular was $2.099, mid-grade $2.199, premium $2.299. A couple days ago it was: $1.749, $1.849, $1.949
The most obvious explanation, as suggested, is that the extra cost of producing premium is related to factors other than the price of crude oil, such as additives, or extra time and effort at the refinery.
I wonder this too, and since the OP says it only ‘runs right’ on high grade has me take it as it’s one of the cars that can run on any grade, but best performance can be had by high grade. In other words it can run and be happy on the low grade stuff, but can advance the timing to make a few more revs on the high stuff. This opposed on cars that can not actually run on the lower grade stuff.
I’m not aware of any fundamental shifts in fuel refining and delivery. I suspect the cost difference is entirely profit - more and more cars are “requiring” 92+ octane premium, and these are mainly higher performance and costlier models in which owners are less sensitive to fuel costs. I don’t think you can buy a Mercedes or BMW today that does not recommend premium, even if it is not warranted. Plus, with declining gas prices, I suspect many sellers are capitalizing purely on the psychology that you are used to pay more.
Forced induction engines with turbos/supercharges will require it, but there is no reason normally aspirated engines need it (though there may be small power losses on regular fuel that just about all ECMs will adjust for…you likely won’t notice). I personally think the cost spread is simply market opportunism.
Look up the compression ratio of the engine in your car. If it’s 9.5:1 or higher it requires premium gas (and will say so on the fuel cap/door). Modern, computer controlled engines can compensate for running a high compression engine with low octane fuel (they won’t ping anymore) but your gas mileage will suffer, essentially negating any money savings (and long term, it’s still not good for the engine).
If your car’s engine isn’t high compression, premium gas is a complete and utter waste of money. It will not run any ‘better’…
Around here, a lot of stations sell ethanol-free premium which is even more expensive than the normal premium markup not only because it doesn’t have the 10% ethanol content, but because they sometimes have to get it from a slightly different supply chain. It could make sense that the premium prices would be a little less responsive to the price of oil if that’s the situation.
I think what control-z said is probably right though. I was doing a long road trip just as the prices were really tanking and the little local gas stations were still in the $2.50+ range whereas the truck stops and other high volume stations were pushing the $2.00 mark. In most places, the gas stations have a minimum markup requirement so they can’t legally sell the gas for less than the cost of their last shipment + $X. That means when prices are going down, the stations can’t cut the price of a product to match their neighbors until they get their next scheduled shipment. A small station might only get a premium shipment a few times a month so those prices are going to hang for a while.
Seems amazingly silly. If I happen to buy a large tankfull of expensive gas just before the price falls, I’m stuck? It will certainly take me a hell of a long time to sell it at, say, $.50/gal above what the station down the street is charging.