Has the price premium on "Premium" (high octane) fuel gone up [in the US]?

With the falling price of oil has come a drop in the prices at the pump. It’s even a recurring topic in the news, how many more states now have an average price of under $2 a gallon. Even where I live, in NYC (usually higher than almost anywhere else), I filled up yesterday where it was $2.09 a gallon advertised - the cash price for Regular unleaded gasoline (87 Octane). Adjusted for inflation it’s the cheapest gas has been in over 20 years.

However, I noticed that the Premium fuel, at 93 Octane, was $2.69. That’s 50 cents more, when is about a 28.7% price premium to regular! And unfortunately, one of my two cars requires 91+ Octane.

I looked at the prices at other stations the rest of yesterday as I drove around, and that difference was everywhere.

Now back when gas was over $4 I’d also always seen the price difference as around 40-50 cents a gallon, which is far less as a percentage. Even a 50 cent gap of $4.20 to $4.70 would only be an 11.9% premium.

So what’s going on? I always thought the higher octane rating was something done in the refining process, based on the same crude oil, but the overhead of an additional process should be a linear factor (a percent multiplier), not a fixed cost difference of 50 cents a gallon?

That’s what I thought. Other related thread. I need premium for my vehicle, but it may be a combination of some new more expensive formulations (I know Shell has introduced such, tho I no longer fill up from them now) and laziness/ignorance on the part of either the district or store managers. Regular here for a typical Shell station is now 1.70, but the premium markup is still the same dutiful 60 cents it was when regular was 3.70.

I think the price differential is more of a market based decision than anything to do with refining expense. It is my understanding that octane ratings are determined at the terminals when the tankers are loading up for delivery, by blending in a small amount of additive.

The price difference is much smaller here in Southern California.

At my local gas station, the jump between the three grades of gas is usually 12c per step. I filled up the other day, and regular gas was $2.59, the next level up was $2.71, and premium was $2.83.

The difference varies from one gas station to another, but around here it’s generally somewhere between 10c and 15c per step.

Wouldn’t that be 60 cents?

Refineries benefit a bit from cheaper energy, same as everyone, but for the most part the refining costs are fixed. With octane rating specifically, that’s achieved with additives. These days that’s mostly ethanol, which isn’t directly tied to the price of oil. The alternative, MBTE, is derived from oil but the cost of the raw materials to produce it are pretty minor, particularly since it turns out to be a major groundwater pollutant and so the liability costs associated with working with it are pretty high.

One thing I’ve mentioned in similar threads is that because of concerns about lower fuel economy and damage to old cars and small gas engines, a lot of the gas stations around me are doing ethanol-free premium. So the price spread is bigger because they’re using a more expensive anti-knock additive in the premium gas, not just more of it. But you don’t see that in California because MBTE is banned there.

I was wondering if they had a separate reserve of higher octane fuel that is still at an “older price level” because it sells more slowly, and because prices are dropping so quickly.

A Google search with those terms found this article from about 2 weeks ago:

Yahoo!: As gas prices collapse, high-octane fuel fetches unusually fat premium