Why Does Premium Gas Cost More?

If you drive regularly you know how much the price of gas can change from season to season and place to place. Some states have cheap gas (New Jersey, we’re looking at you) while others have exorbitantly expensive gas (hi there, California and Hawaii). There are a number of obvious economic and physical reasons for some price gaps—things like supply and demand, how remote the place is, how close you are to a port, the temperature and time of year, and of course, taxes, all affect the price of gas. Some price gaps however are not nearly as obvious. If you drive a car that requires premium gas over regular gas you may have noticed a particularly large spike in the price spread between the two levels at the pump. We here at Instamotor decided to comb the interwebs to find out what’s up.

First, some background. Oil prices have been on the decline over the last year because of a number of political, economic, and environmental, factors. It reached a height of $147 per barrel in 2008 and has currently dropped to around $49 per barrel. Those prices trickle down to consumers at the pump. Right now, the average price of gas across the country is right around $2.31 per gallon according to GasBuddy.com , a provider of retail fuel pricing information and data. Between 1995 and 2005, the average price spread between regular unleaded and premium unleaded hovered right around $0.20 per gallon. By 2011 the difference grew to $0.25, and as of this year the gap has further widened to as much as $0.47 per gallon, according to a story published on Car & Driver .

The Increased Gap Between Regular And Premium Gas

The reasons for this widening gap are based on the economics of supply and demand, as well as chemistry. First, regular unleaded counts for as much as 90% of the gasoline sold in the U.S. today. Thus, refineries are geared towards making the lower octane stuff to meet the demand. Second, it takes additives to make the premium gas and the premium label, according to MIT is dependent upon the blend of hydrocarbons in the fuel and the combination of additives mixed into it. Those additives have to come from somewhere. As more carmakers recommend premium gasoline, the demand goes up. According to Car & Driver the share (by powertrain) of cars that are recommended to use premium gasoline has increased from 20 percent in 1996 to 50 percent today. That, in turn has lead to a shortage of the additives like alkalyte and high-octane blend stock. Which in turn has lead to an increase in price gap. Finally, the U.S. recently began tapping large deposits of oil shale. The kind of oil drawn from this kind of extraction is better suited to refining into regular gasoline. It turns out that the stuff that comes from OPEC countries is better for turning into premium gasoline. Since both versions of gasoline contain the same basic amount of energy (111, 400 BTUs per gallon), in most cases neither one gives your car better mileage. If you have an engine that requires or recommends premium gasoline you could however, sacrifice some power and miles per gallon if you decide to run your car on regular.

All modern cars are equipped with knock sensors. Knock is a term for unregulated explosions in the combustion chamber of an engine. If those sensors detect knock is happening, will change the rate of ignition in the engine to prevent knock. Knock is a problem because it can cause serious irreparable damage to your engine.

Premium Is Often Recommended But Not Required

So, what can you do to save at the pump? Do you really need to fill up with premium gasoline every time? Well, fear not, fellow drivers, it turns out that in most cases, you can cut your costs at the pump. Most cars, even luxury and performance models, only recommend that you use premium gasoline. According to the Consumer Energy Center in California , there’s really no benefit to putting premium into your tank over filling up with regular—and an article over at Scientific American  confirms that. Even for the cars that see some slight benefit, it’s not significant enough considering the increased cost of a gallon of premium over regular gasoline.

Obviously, blowing up your engine is a bad idea. The best rule of thumb is to check your owner’s manual. If your manual merely recommends fueling up with premium fuel and doesn’t require it, then you are probably safe to use regular. You risk no damage to your engine and will save more money at the pump.

For more stories like this check back at Instamotor regularly.