Here in southern California today’s gas prices have fallen to $4.15, $4.25 & $4.35. (Aren’t you glad you don’t live here?)
Does it really cost 10 cents more to produce mid grade gasoline compared to regular and 20 cents more to produce Premium?
Are there these 10 cent differentials where you live?
How many car types need a higher grade of gasoline than regular, but don’t really need Premium. In other words, is mid grade gasoline really necessary?
That’s the way it’s done here in Upstate NY as well except gas prices are roughly $3.85, $3.95 and $4.05.
Some gas stations here (mainly Sunoco) have up to 5 grades of gas which is over kill.
In reality only two grades of gasoline are needed, regular (usually 87 octane) and premium/super (usually 93 octane). I’ll bet prices could be lower if they got rid of the middle grades.
There’s a few 89 octane recommended cars out there. Maybe the most common these days are Chrysler cars and trucks equipped with the 5.7l “hemi” V8. I drove an old 4.1L Astrovan that was too.
Do they actually produce 89 octane gas? I thought that 87 and 93 were blended at the pump to create 89. That’s certainly how Sunoco does it.
You’re probably right. Although I mentioned 93 octane for premium most gas stations actually have 91 octane. Sunoco has 87, 89, 91 and 93 octane. So they’re doing the blend thing.
Huh-it’s more like 20 cent gaps at the stations I see (tho I found one at a truck stop which is usually in 10 cent increments, which is good because I need premium).
Gasoline is a commodity, which means its price is strictly determined by market forces only. Take diesel for example. It’s less refined than all grades of gasoline (it’s not much different from kerosene or home heating oil) meaning it’s cheaper to produce than gasoline. And yet it’s more expensive than 93 octane gas!
Wow. I’m definitely glad I don’t live in SoCal. Gas has fallen, you say? We have 10¢ price differences in grades here in Tucson, too, running at 3.45[sup]9[/sup], 3.55[sup]9[/sup], and 3.65[sup]9[/sup] for 87, 89, and 91.
Most modern cars don’t really require premium,even if they recommend it. Anti-knock sensors and all. For over a year I did a fairly extensive test of my ex 2001 Continental (premium recommended) and came to realize that regular was cheaper than premium when taking fuel efficiency into account.
Of course gasoline was much cheaper back then. Meaning a 20¢ difference at $2/gallon is a lot more expensive than a 20¢ difference at $4/gallon.
A long time ago I worked at gas stations and saw the pricing, long being in the 80’s
Then it was leaded, unleaded and premium unleaded.
and that’s how the pricing was. with 10c between each.
now cost as unleaded was cheapest by .01. then leaded and premium cost the same.
Seeing your post with the 9/10 cents included makes me wonder how much longer they will continue that practice. After all, as Balthisar said about a 20 cent difference being relatively less at $4 than $2 a gallon, that extra 9/10 of a cent has less and less meaning (if gas were/was ever 10 cents a gallon, that would be a 9% increase in cost, but only 0.225% at $4).
Here in Houston, it’s common to see 15 to 20 cent differences between grades rather than 10 cents. When gas prices took a massive plunge a couple years ago, the differentials dropped to as little as 5 to 7 cents between grades. It’s competitive enough around here they probably reflect the cost to the station more accurately.
It doesn’t happen so much now, but back in the 80s/90s, our family did have a couple cars that we switched over to mid-grade due to knocking. That was after several tens of thousands of miles, though. Doesn’t happen now with the anti-knock sensors.
That’s quite a bit of an exaggeration. Market forces are reflected in the price, but many gas stations have contracts forcing them to charge a fixed amount more per gallon than they buy from their suppliers. They often can’t adjust prices to fully match the market.
That’s why many gas stations went under when gas prices started spiking a few years back. Their margins on gasoline took a nosedive, and they couldn’t legally adjust to match. Stations survive on stuff other than gas - the mini-marts inside or being the only station for miles or repair shops or whatever - and the closed stations couldn’t make up for the depressed gasoline margins with those.
One other oddity is that in some of the corn belt states, the mid-grade costs the same or even sometimes less than the regular gas because there’s more ethanol in the mid-grade. Conversely, I’ve seen some stations where the premium is closer to 40 or 50 cents more expensive because it has no ethanol in it.
Ten cents difference per grade is the way it is around here with one glaring exception. There is a BP station with 15 cents difference per grade, and their price for regular is about five cents higher than everyone else. I can’t figure out why anyone would buy their gas there but they are always busy. Must be a good location.
Most stations that offer a mid-grade do it by blending equally from the low and high octane tanks. So in order to keep the accounting simple (not have to keep track of how it was sold) the mid-grade price pretty much has to be exactly halfway between the high and low octane pricing.
This implies that the total spread can only be varied in 2cent/gallon steps, or the mid grade would have to be priced at x-1/2 cents per gallon.
Is having three grades the norm in the US, then? Here in the UK, you only usually see two, the ordinary grade, often called “premium unleaded” (95 RON, equivalent to US mid-grade I believe), and “super unleaded” (97-98 RON, equivalent to US premium).
Quite a lot of smaller petrol stations only sell normal (“premium”) petrol and diesel.
if the dispenser has one nozzle, it’s a blend pump and they do exactly as you say. If the dispenser has three nozzles, there’s likely all three grades in tanks underground.
The gas grades around here used to be 10 cents apart, but ever since gas prices started going up the 89 and 93 octane are usually more than 10 cents apart, more like 15 cents.
My car (Mazdaspeed3) is supposed to take 91 octane, which doesn’t exist around here. I just put 89 in it, I might get a little less power but so be it.
control-z, What altitude are you at? I don’t think I have ever seen it published but my rule of thumb is I can drop about 1 octane point for every 2000’ elevation gain. The gas companies are aware of this, and frequently don’t supply the higher octane ratings to high elevation markets. Vehicle manufacturers seem oblivious to the fact that anyone drives anywhere but sea level. At least we finally got past fixed-jet carburetors!
ETA: There are a couple of ways of determining octane. The European way gives a number a few points higher than the American way.
I’m in Virginia only 500 feet or so above sea level.