Why is there still only 10 cents difference between regular, super, and premium gasolines?

Question

When I started driving, regular unleaded gas was about a dollar a gallon, super was 10 cents more at $1.10/gallon, and premium was 10 cents more than that at $1.20/gallon.

11 years later, regular unleaded is $3.29 a gallon, but super is still only 10 cents more ($3.39) and premium is still only 10 cents more than that ($3.49).

Why is it that although gasoline prices have risen over 200%, it's still only 10 cents more to upgrade to a higher octane?

I can't imagine that the gasoline companies would charge TOO LITTLE for their super and premium gasolines, so that leads me to wonder if they're charging TOO MUCH for regular grade in order to keep the "standard" 10 cents difference.

Can anyone explain this?

Answer 1

In addition to what Patrick posted, there is a marketing aspect (both on a wholesale and a retail level). If a station is going to throw three prices up on their signboard, doesn't "3.089 / 3.189 / 3.289" look better than "3.089 / 3.289 / 3.489"? I mean, you'd look at that bottom price and think, "It's almost 3.50 a gallon!". We've been trained to expect the +10, +20 cent difference and largely ignore it.

Since 90+% of what they sell is regular, and the main point is to get you into the station is to sell you Doritos and a Slurpie (where the big mark-up is), both wholesalers and retailers don't want to scare you off on the low-volume gasoline blends.

To correct one thing Patrick posted: while the capital costs and labor costs of the additional refining (creating more ringed and branched hydrocarbons of higher octane) and the associated separation processes are fixed per gallon, there ARE also energy inputs. So that component would go up with higher fuel costs - refineries don't get energy for free. They, ultimately, burn feedstock and get electricity off the grid so it is costing them somewhat more to make premium fuels now.

Answer 2

The "grades" of gasoline are dependent upon the octane level. The difference is achieved in the refining process. The amount of Regular gasoline you can refine from a barrel of oil, is the same as the amount of Premium gas you can refine from a barrel of gasoline. The cost difference is based on the refining process, as it takes more refining process to make a higher octane gasoline. Therefore, the cost difference between the two porducts is unaffected, whether the base cost of oil is $4 a barrel or $74 a barrel. What you are paying for is the refining expense, which has not changed.
Out of a $3.00 gallon of gas, the cost ofthe base oil is about $1.60, the cost of refining and transportation is about 60cents, the the taxes to the Fed and state is about 60 cents, the local gas station makes about 10 cents, and the big bad oil company is making about ten cents as well. Oil companies make a lot of money, because they sell a lot of gas. Not because they make a lot on each gallon.

Answer 3

There are more people who drive using the regular than the permium & super. And it probably dosen't cost much more to make the super or permium blends because the all start as reular and just a little more addivites to the super & permium. Also it could be the bulk sales as well if you sell more at a lower price you make up the difference for the higher priced. That is just what I think but who knows what the oil compaines think they are making record profits for the last three years and we the people who have to use ther products in order to make a living are reducing are income because of the high cost of gasoline. It is actually to some families to have only one person working because with two the cost of gas reduces that second income and it doesn't really pay for them to have two incomes.

Answer 4

If you read the news, you will see that gas company profits have grown by leaps and bounds. Although the price of a barrel of crude oil has increased dramatically, it has not increased in line with gas prices. The difference between the grades of gasoline also has more to do with the refining process, you start with the same raw product. The costs of producing this difference in grade may not have significantly changed.