Back when gas was .90 a gallon, premium ran about .999 a gallon (or roughly 10% or ten cents more) than regular.
Regular is now going for $2.70 here, and premium is still only 10 cents more (not 10% or .27 more).
Is this all due to supply and demand? What else could it be? Just curious what all of you think.
2006-07-29 08:55:30 · 7 answers · asked by Mary K 4 in Business & Finance ➔ Other - Business & Finance
Well, when the cost of producing increases, there's a shift in the supply such that for any quantity willing to be supplied by producers, a higher price is necessary. If that's all that was going on, Premium would raise by an amount about as equal as the amount for non-premium *if* the elasticities of demand are the same. But they're not, and the big reason is because people who buy premium can substitute non-premium, so their demand is more responsive to price: in short, the gas companies would make less profit by rising the price of premium any further.
In addition, the demand for premium may be shifting in aspects unrelated to the price. If people are purchasing more vehicles that premium doesn't help with, then less people are willing to buy premium overall, which brings the price down.
2006-07-29 09:00:35 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Because the gas companies sell more rgular than premium. If they were to raise premium prices more than regular, they would lose more money and if they were to raise both so that they were equal, they would lose more money than if they were to just keep premium the same and raise regular, since most gas sales are just regular.
2006-07-29 09:02:18 · answer #2 · answered by lecarz 3 · 0⤊ 0⤋
Premium was already overpriced, and a rip off. Can't gouge the prices more and still have customers.
2006-07-29 08:59:33 · answer #3 · answered by Gwen 5 · 0⤊ 0⤋
It has to do with people are buying more cars that use regular gas than premium.
Supply and demand has little to do with this.
2006-07-29 09:01:14 · answer #4 · answered by michelegokey2002 4 · 0⤊ 0⤋
the government uses premium more and they dont want have to count change out (like the rest of us) for gas...so they keep it low for thereselves.
2006-07-29 08:59:58 · answer #5 · answered by smokinitup0 2 · 0⤊ 0⤋
nobody buys it.they save it for the rich
2006-07-29 08:58:43 · answer #6 · answered by osageavenger 4 · 0⤊ 0⤋
probaly cheaper to produce
2006-07-29 08:59:41 · answer #7 · answered by shaggy 2 · 0⤊ 0⤋