Shell Regular $1.41, +30¢ Midgrade $1.71, +20¢ Premium $1.91 Why such difference?


#1

Bradley Sinclair
$1.34 85 octane = 1.58¢/octane point
$1.49 (+15¢) 87 octane = 1.71¢/octane point
$1.69 (+20¢) 91 octane = 1.85¢/octane point


#2

Why not?


#3

Manufacturers and retailers do not set market price, they set suggested pricing, and if people buy at that price, the price holds. If the price is too high and the inventory is not moving, the price has to drop until people start to buy. As long as they have enough buyers at the higher price they will keep the price high. Basic market pricing.


#4

Really, Robert? As far back as I can remember the price for the higher octanes was always more than the lower octanes. Do you think maybe, just maybe, the higher octanes cost more to produce and so cost the retailer more so they charge more, or is that just too simple of an explanation?


#5

Years ago I worked at a Conoco Station.
Convinced the owner to try lowering fuel prices.
We sold more fuel which made up for the lower income per gallon, but also made much more money from cigarettes and junk food sales.

Were the prices between grades 10¢ difference?


#6
Years ago I worked at a Conoco Station. Convinced the owner to try lowering fuel prices.

Yeah right.


#7

Gasoline straight from the refiner has an octane rating of about 70. It has to be enhanced with iso-octane or a another chemical that raises to octane level to prevent knocking. 87 octane gasoline requires 13.3% more iso-octane than 85 octane. 91 octane requires 40% more. ThT is part of the cost. Additional storage tanks and the work that goes into creating extra grades is also part of the cost. There is probably some “just because I can” included in the price too.


#8

My Conoco boss said we received two products from the refiner.
Premium and Regular. Midgrade was derived by pump mixing 85 with 91 octane.
(How Sunoco produces their five grades?)
(In cold weather, morexpen$ive Diesel #1? was ordered and added to the tank to prevent fueline jelling. So we had to pay attention to weather forcecasts. Perhaps unfortunate for those driving into the cold mountains when we dispensed warm-weather Diesel.)


#9

“Years ago I worked at a Conoco Station.
Convinced the owner to try lowering fuel prices.”

“Yeah right.”

Yes. We made much more money by reducing fuel prices!
I also got Lotto at the station.


#10

Sunoco does it by blending the two grades the tanker deliver in different proportions at the pump.


#11

There are classic pricing strategies that show how much % your revenue has to increase with each % decrease in price to hold your ground. Depending on the gross margin, and gas retailers have slim margins, with a 10% decrease in price, you have to increase your sales by up to 50% to maintain (not increase) your profit dollars, your sales have to go way up to increase the profit. People frequently confuse revenue with profit and get themselves in trouble. Sometimes it is better to sell less at a higher price. I am sure that the major distributors of gasoline share this type of information with the retailers or the organizations the retailers belong to share it.


#12

“I lose money on every gallon, but make it up in volume…”


#13

I think the better question is why it was so high just a few years ago…


#14

Simple. $100 oil. Why $100 oil? US production had been declining, and the major part of the other oil production was in the tinder box middle east, combined with expectations of unending growth in China and India. Now at $30 or so, 250,000 workers have been laid off, many oil companies will go bankrupt, and all the US drilling that brought production from 5 million a day to 9 million a day has shut down. So $30 is too low, $100 is too high. Maybe it’ll settle at $60/bbl? I’d rather have a secure supply of $2.50/gallon gas than $1.50/gallon gas accompanied by the loss of much of the domestic oil industry.

And where did the all-powerful ‘big oil’ price control go? Some folks here claimed the oil companies controlled the prices. Seems like that was wrong.


#15

@texases The Saudis are also flooding the market to get prices down to the point where shale oil production isn’t economically feasible.


#16

The US production is 4 million barrels a day above what is was 7 years ago. The Saudis are producing maybe 1 million a day above prior levels. They aren’t flooding the market, they just aren’t reducing production like they’ve done in the past. The current low oil prices are the direct result of the massive increase in US oil production.

The Saudis are succeeding, over 2/3 of US rigs are shut down, a higher % in the shale regions.


#17

I stopped by a bp, mid grade was $1.00 a gallon more, another BP .50 more, another bp.20 more, The more expensive one must oviously be better? :wink:


#18

Around here $0.20 per ‘step’ is pretty common.


#19

about 15 yrs ago I drove a ford truck with a 390 car motor in it. the old motorcraft 2 barrel from the truck had been put back on the motor. it wasn t really a good fit and the seal was a bit narrow on one edge IIRC, but it got relatively good gas mileage. a fellow in MA put a 4 barrel on it once instead of rebuilding the carb like I had asked him too. it ran great but used 25 % more gas. I had him take it off…

anyway…

the truck got better mileage with high test.

I did a lot of highway driving then, about 60 miles a day, and figured that when the high test was only 20 cents more per gallon than the regular I got about the same bang for my buck and the truck ran better, so I ran a tank of high test thru it fairly regularly.

the engine is still going strong in a tow truck.

I never see high test for 20 cents more anymore, more like 40 cents more…


#20

My computer is screwing up again and wont let me post anything,I think there was a Sunoco pump that blended Sunoco "Blue " and "260 " to give you the octane you wanted.