nfb: Fuel economics gurus....explain this one to me

[Joe 1320]

I've been thinking about this lately. For what seems like the last 20 years, the price of gas was split about .10¢ cents for each upgrade of fuel. I can remember perhaps 15 years ago, regular was roughly $1.29/gal, mid grade $1.39/gal, premium $1.49/gal...... here we are 15 years later and it's still the same .10¢ spread between fuel grades. How the heck can that be? Locally, our prices are now $2.29/$2.39/$2.49......If you look a simple inflation, the result would be a wider spread. Am I wrong here? It should not be the same spread unless it's merely a marketing ploy.

[wolfdogs]

you see, ducks have webbed feet...so they can stomp out forest fires. Now, the price of tea in china is not what seems to be the razor inside, where you need to jerk the handle.... chili on the otherhand, is quite spicey but the average flight altitude of an airlinner is 34,000 feet so that beatles can burrow deeper in hard soil...........


















d&r

[SteveH95Formula]

Ahhh... yea that makes sense!

[Jay 02 TA ws6]

Joe, I've noticed it too, and here's what I am thinking...

Take small/medium/large soda pops at movie theatres for example...

$2.75 for a small, $3.00 for a medium, $3.25 for a large... the cup itself represents a greater cost to the theatre than the liquid itself does, and the difference in price of the cups is far less than $0.25... so if the small cup costs $1.00, there is a $1.75 profit; the medium cup costs $1.05, there is a $1.95 profit; the large cup costs $1.10, there is a $2.15 profit. Profit margins continue to increase even though the price increase is small.

I'm fairly certian that higher octane fuels do cost more to manufacture, but it's probably a very, very small amount so that the gas stations are still able to maintain their higher profit margins despite the fact that the intervals between fuel grades has not increased with inflation. As far as a marketing ploy, they are probably keeping the intervals at $.10 to keep the higher octane fuels attractive to potential buyers.

[bru333]

Take small/medium/large soda pops at movie theatres for example...

$2.75 for a small, $3.00 for a medium, $3.25 for a large... the cup itself represents a greater cost to the theatre than the liquid itself does, and the difference in price of the cups is far less than $0.25... so if the small cup costs $1.00, there is a $1.75 profit; the medium cup costs $1.05, there is a $1.95 profit; the large cup costs $1.10, there is a $2.15 profit.

Never mind gasoline...Where did you find a theatre with drinks that cheap?!

[Kevin - Blown 95 TA]

I think the additives that help make the fuel different might not be skyrocking in cost as much as crude is.

[Al 96 Ram Air T/A]

The simplest answer I can give is one based on supply and demand. The price of gasoline is artificial in that it is set by the oil companies and OPEC. While their are some regulations that prevent blatant price gouging, the price of gasoline is established based on what the refineries believe we will pay, without much backlash. While it is true that higher grades of gasoline do contain additional chemicals (octane), the cost is based on demand. The more we want, the more they'll charge. Lokk at ExxonMobil's profit margin last year. They made more money than they've ever made in their history. So in essence, the refinereis don't really care what the price per barrel of oil is. They'll simply pass the additional cost along to the consumers. And, if they are smart, they'll add in additional profits and blame it on the price of oil.

[Steel2686]

I was told by a gas station owner who is a friend of the family, that they don't really make their money on 87 octane. It's the 89 and 93 where the profit lies. He said it also depends on which franchise the station is using i.e. Exxon, Texaco, Shell, etc...

[Jeff_in_Atl]

Add to this question that yes there is a 10 cent spread but mid grade is 10 cents more than regular but you only get 2 more octane points. Then for another 10 cents you get 4 points of octane. The mid grade isn't really mid.

[Trash man]

hmm gas here isnt by that spread(in new milford anyways) its 2.42 for 87, 2.49 for 89 and i beleive 2.56 for 93. and i also notice there was no 90 where i get my gas(Hess, unless it jsut rained then i go up hill to citgo cuz hess floods )

[raroZ28]

I've been thinking about this lately. For what seems like the last 20 years, the price of gas was split about .10¢ cents for each upgrade of fuel. I can remember perhaps 15 years ago, regular was roughly $1.29/gal, mid grade $1.39/gal, premium $1.49/gal...... here we are 15 years later and it's still the same .10¢ spread between fuel grades. How the heck can that be? Locally, our prices are now $2.29/$2.39/$2.49......If you look a simple inflation, the result would be a wider spread. Am I wrong here? It should not be the same spread unless it's merely a marketing ploy.

Dang, gas must be way higher in fla. 15 years ago gas wasn't even $1/gallon. Regular was like $.88, and 10 cents more per upgrade.

Those were the days. My dad would give me a buck and tell me to fill up the gas can to cut the grass. I'd still have like 10 cents left over to buy a couple bazooka joe's!

[Roger in Kensington]

Once upon a time . . .

I remember buying 100 octane Amoco Super unleaded for less than 35 cents a gallon.

Women, on the other hand, have always been expensive.

[97LT1Z28]

My best friend works for Valero Energy here in San Antonio.

Basically, he said that they're poking our eyes out on the regular unleaded. The measley .10 they add to each grade is just a quick little bonus for the supplier and retailer. Believe me, everyone who works for an oil company down here is cashing in - especially now.....

[Joe 1320]

Dang, gas must be way higher in fla. 15 years ago gas wasn't even $1/gallon. Regular was like $.88, and 10 cents more per upgrade.

Those were the days. My dad would give me a buck and tell me to fill up the gas can to cut the grass. I'd still have like 10 cents left over to buy a couple bazooka joe's!

holy crap...... regular unleaded has been over $1.00 a gallon down here since 1982. In Georgia however, it was considerably cheaper. I think in '94 on my way through there I was able to get it for $1.09 and it was at least .30¢ per gallon higher in Florida.

[ONLNTM5]

I cut grass around my neighborhood when I was 12 years old, to earn extra money. I would average a gallon of gas to each yard. I charged $5.00 per yard, and I used to make $4.75 profit, after paying for a gallon of gas. That's how cheap it was back in 1973. On the other hand, electronics are substantially cheaper now, than they were in the 70's, in some cases about the same, but everything else is a whole lot higher.