Simple answer…Because they can. There are millions of drivers who buy higher octane then they need thinking it’ll give them better performance…and it doesn’t.
There are also many of us who drive cars that require premium, and have to pay the upcharge whether the gas station is ripping us off or not.
@shadowfax have you ever figured the amount of extra money you spend a month burning premium as opposed to an equal amount of regular gas? Unless you are a high mileage driver, it’s probably not much.
I drive about 1200 miles a month in a car that averages 22MPG. That’s 54 gallons a month. The top tier gas station up the street is selling regular for $2.559 and premium for $2.819 today. That’s a 26¢ difference per gallon. If I can’t afford $14.18 extra a month, then I can’t afford to drive ANYTHING, much less a premium gas car. I don’t look on paying for premium as a big deal.
Your mileage may vary.
and have to pay the upcharge whether the gas station is ripping us off or not.
???
The gas station isn’t ripping anyone off. The price is posted clearly on the sign. If you don’t like the price you don’t even have to pull in off the street. Just keep driving until you find a price you do like.
Though I agree with what you say, there still remains the fact; we are at the total mercy of the energy corporations. You can choose not to drive, but if you do choose to, you do it with gasoline or diesel. . Practically speaking there is no other fuel available for most of our uses. Now, if there were a practical electric car, not a 35 to 60k one, a practical flex fuel car and competing energy source stations, sure. The same major players own gasoline, diesel, propane and natural gas. If fuel cell powered electric cars come on line and battery technology remains very expensive, they will own that too and price fuel at a pump as it is now. There is really no free market for energy for 99% of the public.
@dagosa, Considering that there are many providers of gas and diesel, why do you think we are at the mercy of the energy corporations? As you state, you can choose not to drive. A quick check shows that there are at least 10 different sellers in my area. Those many corporations compete with one another for our business keeping the price on fuel as low as any one of them can sell and still profit.
In any event, the Federal and State governments make more on a gallon of gas than the oil companies do. Exxon-Mobil made 11% profit on sales last year, my state makes 11% on each gallon (half their business, I’d guess). The Feds make 8% plus income tax of about 5% of sales.
This is far better than the utility company situation around the country. 80% are privately owned, single source providers of nat gas or electric. 20% are publicly owned. Many areas have some competition for gas and electric suppliers, but the owners of the supply chain, grid or pipeline, are still single sourced. Zero competition there.
Overall, I’d say the oil companies are far more free-market than utilities.
$2.59 $2.97 $3.07 Conoco…$2.85 $3.06 $-.-- another Conoco
$2.56 $2.76 $2.96 Safeway
$2.89 $3.09 $-.-- 7-Eleven
(Difficult for me to buy midgrade when it is so much more than regular.)
@"MG McAnick" I’m not arguing that I shouldn’t buy premium. If I wasn’t willing to buy premium I wouldn’t have bought a car that requires premium.
@asemaster No, the price is not clearly listed on the sign. The price of regular is listed on the sign. The slot that used to list the premium price now often lists the price of E-85. Or even cigarettes. Most times where I live I don’t know what the price of premium is going to be until I’m at the pump and out of the car because you can’t read the LCD screens from inside it.
It used to be that the standard was 20 cents more for premium. Now it’s 30, but some gas stations around here are taking advantage of the fact that people know this, and are bumping it up by as much as 50 cents more per gallon. That’s a ripoff. I do make a mental note of those stations and avoid them in the future, but more and more are doing it - pretty soon there won’t be any stations left that aren’t on my avoid-list.
@dagosa
The same major players own gasoline, diesel, propane and natural gas. If fuel cell powered electric cars come on line and battery technology remains very expensive, they will own that too and price fuel at a pump as it is now.
They already do. Hydrogen is often cracked from methane. A great place to find methane is in spent oil wells. It’s also fairly well known that Texaco/Chevron bought the Ovonics NiMH battery patent and then prevented electric car development with it. What’s less well known is that they sold it again a few years back (largely I suspect because companies like Tesla figured out ways around it and so using it to block development was no longer working), and not long after announcing a new development that would slash the cost of electric car batteries, the company they sold it to was acquired by BASF, which also produces, you guessed it, gas and oil.
@MarkM Up until 2006 or so, the Nissan VQ V6 recommended 91 octane or better no matter if it were in a Nissan or Infiniti. It could run on 87 octane though, but at a 15-20 HP hit in power and 3-4 MPG hit in fuel mileage. Later VQ variants can run happily on 87 octane though.
In Europe octane is measured in RON or Research Octane Number in the US it’s the Anti Knock Index (or AKI). You can compare the numbers somewhat. The rule of thumb is that that RON is usually about 5 points higher than that what the AKI value is. So gasoline sold as 98 octane RON would have the same anti-knock properties of 93 octane AKI. It’s a common misconception that European gasoline has a substantially higher octane rating than U.S. gasoline. They just measure octane differently. At most we’re talking about a 1 or 2 point AKI difference.
Of all the times to make the ‘we are at the mercy of the energy corporations’ statement, now is not it. Oil and gasoline prices are plummeting, and natural gas is an unbelievable bargain compared to the last 40 years. If those companies had the power some here claim, why are they ‘allowing’ all this to happen?
Also, natural gas is produced and sold by a very different mix of companies than oil.
And did folks know that ‘big oil’ isn’t? Ten years or so ‘big oil’ produced all of 14% of the world’s oil. Now it’s down to 10% and dropping. Time to fine another bogeyman.
Oil and gas prices are plummeting because OPEC is trying to screw Russia over. As soon as Russia is screwed, or alternately assassinates the people in OPEC who are trying to screw it, gas prices will go right back up.
Way more happening than just OPEC vs. Russia (I hadn’t even heard that one. Why?). US oil and natural gas production is way up, depressing prices world-wide. OPEC is holding production constant in the face of dropping prices, partly to force out high-cost production in the US.
@shadowfax There are a number of forces at play here, not the least is the remarkable increase in US oil production and its reduced imports. Russia is suffering and losing some of its arrogance, but is far from dead.
Anytime there is an imbalance of supply and demand, it affects the price. OPEC would like nothing better than to block all pipeline access from Canada so as to shut in a large part of its production.
@Docnick You’re right, there are lots of forces at play here. However the remarkable increase in US oil production depends upon oil prices being high, because otherwise it’s not profitable enough to get oil via the more expensive fracking process.
I do agree that OPEC isn’t going to hurt Russia, at least not in the short term. They have lots of cash reserves for just such a problem as this.
To slow fracking, oil prices would have to drop to around $50 per barrel; we are a long way from that. That’s not likely to happen since OPEC members rely on relatively high prices to fund all their government and social programs.
Since demand from large users such as India and China is still growing, I see a bottoming out soon, but no major increase for some time to come. That may be a year or more. In the meantime, enjoy the low prices.
Guess I wasn’t clear. GASOLINE has no competition as an automobile fuel. Gasoline is fungible, all delivered over the same pipelines by just a few distributors. Sure, you can have several different gas stations with different plaques over the pumps, but the whole sale distribution of gasoline is organized by the major oil distribution corporations so as not to compete with one another. This happens in the insurance “industry” as well. The small distributor is left to his own to compete and in reality, they make a living doing it, never getting rich. We ARE at the mercy of the these major producers and, as @Shadowfax reminds us, it has been regular business practice to minimize the competition. Battery technology is really the only key to long term competitition and that will be circumvented by electric drive powered by fuel cells both hydrogen and you guessed it, gasoline fuel cells. Nothing will change as long as the big players control it’s distribution and until every drop of oil is pumped from the ground.
Look at the bogus pipeline proposal that now, even both sides are caving on do to politically and not practical answer to energy needs. Tar sands oil has no place in our economy with it’s higher pollution rates both in use and delivery.Benzene, a carcenogen is needed in the pipes just to get it to flow. There are many instances where the govt. has had to clean up oil spills from pipe lines at our, not their expense and the these pipelines for tar sands oil could be catastrophic in effects. To fresh water in the states it passes through. Two gallons of fresh water are polluted for ever gallon of oil extracted from tar sands and that’s a good trade off ? Canada is hot to trot but only because their surplus of fresh water that we as a nation here could ultimately be depending upon. It will be used to put more high carbon footprint energy on the world market from refined tar sands fuel oils that will go DIRECTLY over seas from the gulf refiners. We won’t see it as a fuel nor should we.
This is just one continual indication how we are at the mercy of the energy corporations which control our destiny. The price of gasoline WILL go up. i think that is a safe bet. Any takers ? The only way we can mitigate the eventual rise is a continual March toward energy from non fossil fuels and renewable resources. We are doing well and feast on cheaper gas because America came out of the recession better then most developed nations. That’s it…
I find it both amusing and sad that we now apparently view $2.64/gallon to be “low” prices. It was only 10 years ago that TV news was pointing out that gas stations were having to replace their electric price signs because the dollar digit could only display a 1. I used to be able to fill my tank for 12 bucks on a bad day. The current prices are lower than they were 6 months ago, but they are not low.
I am evaluating oil development projects in the US today that will not happen because of the oil price drop. So yes, oil prices are ‘low’ compared to what is needed to continue the large volume of oil production we have seen in the last few years. And yes, oil and gasoline prices will increase.
All of this is part of an open market. I see no magic controlling hands at work.
E85 is 1.59 today. Woohoo.
A number of incorrect statements about the pipeline have been made. It’s important for folks to understand the facts, it’ll have a direct impact on the gas prices. Getting that crude to market will demonstrate to the world crude market that a large and reliable source of crude is available, which will reduce oil prices. We’ve seen how that reduces gasoline prices.
“Benzene, a carcenogen is needed in the pipes just to get it to flow.” Incorrect. The heavy Canadian bitumen is diluted, typically with light hydrocarbons from natural gas production. Is there benzene in the crude? Yes, there is some benzene in just about ALL crude oil. North America has tens of thousands of crude and chemical pipelines. The ONLY reason this one is different is the source of the crude, not the risk of the pipeline. If folks want to complain about Canada producing their tar sands, fine. But 99% of the pipeline ‘problems’ are mere fabrications, or exist with all the other pipelines in the US, and are risks we deal with every day, for decades.
“There are many instances where the govt. has had to clean up oil spills from pipe lines at our, not their expense” There is NO reason to think that this pipeline, funded by major companies, would not be held responsible.
" and the these pipelines for tar sands oil could be catastrophic in effects. To fresh water in the states it passes through." More fabricated nonsense. The pipeline passes near and over the eastern edge of the Ogallala aquifer. This is the ‘downstream’ edge of the aquifer, there is no physical possibility of significant contamination in the unlikely event of a spill. Cleanup procedures from a spill near an aquifer are straightforward.
" Two gallons of fresh water are polluted for ever gallon of oil extracted from tar sands and that’s a good trade off ? Canada is hot to trot but only because their surplus of fresh water that we as a nation here could ultimately be depending upon." So we don’t want them to produce THEIR oil, because we may want THEIR water? Since when do we have the right to dictate to a foreign country how it handles its resources? Would we allow Canada to dictate that to the US??
" It will be used to put more high carbon footprint energy on the world market from refined tar sands fuel oils that will go DIRECTLY over seas from the gulf refiners. We won’t see it as a fuel nor should we." So lowering oil and gasoline prices are a bad thing. But I thought the oil companies were bad because they kept prices high. I guess they’re bad, no matter what…