Posted in: Gas Prices,
by Patrick DeHaan on May 28, 2013 02:00 PM
Gasoline prices can vary widely from state to state, even city to city. We recently received an e-mail from a member asking us to explain some of these pricing disparities. Let me address a few of the points that the member asked us to answer.
Question 1: Pricing differences vary between regular and premium. While some areas may see a 20c/gal difference between regular and premium some stations in some areas see a difference of 50c/gal or more!
Answer: Sales of premium gasoline have been in decline in some areas of the country, leading to less production from refineries and higher costs. Some cities/states don't consume as much premium gasoline as they used to so less is produced. This leads to low inventories of premium gasoline in some areas, and can lead to higher differences in some areas that either have tight supply or low demand or both. Refineries in different areas can adjust how much premium gasoline they produce, and this can cause the price difference to be different in some areas depending on local supply/demand fundamentals.
Question 2: Why is regular gasoline sometimes more expensive than mid-grade in some areas?
Answer: We see this oddity in some upper Midwest states or corn belt states. The primary difference is that regular contains no ethanol in these cases, where as mid-grade contains ethanol. The cheaper ethanol being blended in reduces the amount of more expensive conventional gasoline being used, and so the blended product costs less.
Do you have any gasoline based questions we can answer? Let us know in the comments and we'll try to get some time to look and see what you want answered!