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I've tried googling this, but not coming away with a very clear answer.
Why does the differential between premium and regular rise in proporation to oil prices?
I have long thought that premium is basically regular with non-petroleum octane-boosting additives, and those additives ought not be influenced by crude prices. But that may not be the case.
It seems that premium is a blend of regular low-octane gas and a special high octane carburetant, which also comes from the same petroleum, is cracked differently, but still goes up and down with crude prices.
Can someone clarify this?
20 years ago, when Georgia gas was 78c a gallon [sigh], the premium grade was only about 5c more. But now at my local station, premium is 37c more than regular.
I think most organic octane-boosting additives are petroleum based, including MTBE, derived from natural gas and crude oil. The notable exception is ethanol.
Ethanol actually replaces a significant quantity of petroleum-based gasoline, so it does not raise the price of a gallon. But what about MTBE? Is that merely a very small quantity of additive that is added to what is virtually a full gallon of regular gas? Or is it a replacement (say, 10%), which also costs about the same amount (or more) to produce, so the cost of a full gallon remains linked to the price of crude?
In other words, if the octane of a full gallon of gas is increased by adding a few ounces of an additive, what is the justification for doubling the price differential, when the price of crude compels a doubling of the price of regular unleaded?
Just another way for the gas companies to ripoff their customers, one of my favorite ripoffs is when the gas station fills up its tanks at one price then the price per gallon/liter goes up and we are now paying a higher price for the gas thats already been paid for at a lower price.
Then theres the marketing department that convinces people to buy the higher priced super deluxe premium gold hightest ultra supreme gas when their cars engines were designed to run on plain old regular gas.
My personal response to the high gas prices is cutting back my driving by 500kms per week and buying a car that gets 40mpg.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Unlike most business, gas is not subject to supply and demand, though they often use "short supply" as justification for higher prices. Since they are not selling very much premium, they raise the price that much more to make it remain profitable. Since the only cars that need it are high-performance (expensive) they figure those drivers can afford it. The other thing is their trickery, most people will drive into the one with the lowest regular price, posted first, and not realize that the premium may be higher there than at another one down the road. You may find it cheaper to add your own octane boost from the auto parts and use Costco, AM/PM or Safeway regular. If the additive costs you $7.95 for a 20 gallon tank, and the name brand premium gas is 15 cents a gallon more, you are losing money, so price it out. The additive will usually have cleaners in it too, so the cheaper gas won't carbon up your system.
Unlike most business, gas is not subject to supply and demand, though they often use "short supply" as justification for higher prices. Since they are not selling very much premium, they raise the price that much more to make it remain profitable. Since the only cars that need it are high-performance (expensive) they figure those drivers can afford it. The other thing is their trickery, most people will drive into the one with the lowest regular price, posted first, and not realize that the premium may be higher there than at another one down the road. You may find it cheaper to add your own octane boost from the auto parts and use Costco, AM/PM or Safeway regular. If the additive costs you $7.95 for a 20 gallon tank, and the name brand premium gas is 15 cents a gallon more, you are losing money, so price it out. The additive will usually have cleaners in it too, so the cheaper gas won't carbon up your system.
Bascailly gasoline is like other commodities;no different. The main difference US sees now is that thier demnd does not control the cost because of rising world demand is out striping our rise in per centage a year.Its the same as refiners ;which we are more and more becoming;are willing to pay more for crude oil. Energy i general is a commisity which is chased to assure suply because it is the driver of most other commodties. Besides crude produces 19000 other essential prodcuts and is cheap compared to any known alternative in energy verus cost.Most alterntives cost alot in other forms of energy to produce.
Bascailly gasoline is like other commodities;no different. The main difference US sees now is that thier demnd does not control the cost because of rising world demand is out striping our rise in per centage a year.Its the same as refiners ;which we are more and more becoming;are willing to pay more for crude oil. Energy i general is a commisity which is chased to assure suply because it is the driver of most other commodties. Besides crude produces 19000 other essential prodcuts and is cheap compared to any known alternative in energy verus cost.Most alterntives cost alot in other forms of energy to produce.
I think what you are saying is that free-=market capitalism is defined as an economy in which the sellers sell for the absolute highest price that consumers are willing (or can be persuaded) to pay, and get to keep as profits whatever amount is the difference between the cost and that maximum price. If that differential is negative, the taxpayers patriotically make up the shortfall. in order to prevent the economy (and hence the republic) from being "harmed" by the failure of a virtuous corporation.
Marketing to idiots. Many people driving cars that will run fine on regular have been sold on the lie by oil companies that "premium is better". Like they say, a fool and his money are soon parted.
True some cars require premium. Why did someone buy it. Is it necessary for you daily commute or to get the groceries home from the store?
Marketing to idiots. Many people driving cars that will run fine on regular have been sold on the lie by oil companies that "premium is better". Like they say, a fool and his money are soon parted.
True some cars require premium. Why did someone buy it. Is it necessary for you daily commute or to get the groceries home from the store?
Why buy a car that requires premium? It's all about performance and the driving experience.
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