22 of 30 - Grading Petroleum

[aggienaut]

   Here in the United States, gasoline is always sold as "Regular" "Mid-grade" and "Premium." It is always sold in increments of 10 cents -- back when Regular was $1.00 (/gallon), Midgrade would be $1.10 and Premium $1.20 (all prices plus 9 tenths of a cent actually because gas stations are sheisty like that). When Regular was $2.00, Mid would be $2.10 and Premium $2.20 ... and at present here Regular is $3.09*, Mid $3.19, and Premium $3.29.

* I believe that's 81 cents a liter.

   When Regular was a dollar, I'd have assumed Mid cost 10% more to produce/provide, and Premium 20% more, hence the price. This seems like a logical deduction to me. But by that logic, Premium should presently be $3.71, not $3.29. At the latter price it's now only 6% more expensive than Regular.

   So whats the deal with the different grades?

   And who buys the midgrade anyway? It would seem to me most people buy the Regular because it's cheapest and there's not generally believed to be a worthwhile difference. However, I know some people want the best of everything, so they'll buy the premium for their gold plated hummer H3s. But who thinks "I want a little better, but I'm only gonna go 3% better, 6% better is just gratuitous!" ?? It seems to me there'd be no market for the midgrade.

A typical little street in Zaragoza

Comments

[nibot.livejournal.com]

The octane rating of gasoline describes its resistance to detonation. You want your gasoline to burn upon ignition not detonate spontaneously.

As far as I know, there is absolutely no value in getting the higher grades (octanes) of gasoline unless your vehicle needs it (because it has a higher compression ratio). You either need it or you don't. Buying high grade gasoline if you don't need it is simply a waste of money.

Might be wrong, but that's my understanding.

[emosnail.livejournal.com]

Hm. I know someone who said once they went to a station that was having a special on premium and it was cheaper than regular so they filled up on it ... and was then bothered to find their car ran out of fuel even FASTER than ever before. That might explain it.

[likeabikemike.livejournal.com]

My first guess would be that demand for higher octane is dropping as more cars are built to run on regular.

I know that Chevron used to put their cleaning additive Techron only in the premium grade, so it isn't necessarily all about octane. Just did a quick scan of Wikipedia and it's claimed there that the different grades have the same amount of "detergent". Also (pertinent to your post) it claims that gas stations typically have just 2 storage tanks and blend on the fly. Cool eh?

There are a lot of factors that go into the price of gasoline. Transport, processing, additive price, demand, R&D, extractive infrastructure and discovery costs.

And don't forget taxes, political campaign contributions, CEO salaries, MTBE lawsuits, and oil wars--these are all rising far faster than simple gasoline additives.

[emosnail.livejournal.com]

Hmm thanks for the interesting comment. So I guess that's why it's not impractical for them to have the rarely-used midgrade everywhere, they're just mixing things up as they go.

Also on the subject of lawsuits and such, I was wondering whatever happened to the crew of the ship that crashed into the bay bridge, because last time I checked they'd been interned in SF for a year. Found this good article which you might find interesting.