At a Sinclair station I drive by on my way home from work there was a 15 cent gap between regular to mid-grade and mid-grade to premium for the longest time. Then it went to a 20 cent gap and now it is 20 cents from regular to mid-grade and 25 cents from mid-grade to premium.
Price Difference of Premium vs Regular
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We are 0.40 more - 0.20 more for mid grade and another 0.20 for premium ...
Locally it's been at minimum $.30 for each upgrade. Over half of the stations are closer to $.40 for the mid-grade--->premium jump.
The days of the $.10 steps are long gone. Heck, the days of the $.20 steps are long gone as well.
The days of the $.10 steps are long gone. Heck, the days of the $.20 steps are long gone as well.
Originally Posted By: SevenBizzos
Locally it's been at minimum $.30 for each upgrade. Over half of the stations are closer to $.40 for the mid-grade--->premium jump.
The days of the $.10 steps are long gone. Heck, the days of the $.20 steps are long gone as well.
Still pretty common near me. It's pretty clear that the price difference has little to do with actual costs. The pricing can be engineered for all sorts of things. I've heard some gas station owners price their fuel to barely make any profit for regular, but then make it up with premium. And of course the biggest profit center of any gas station these days is convenience store sales.
Locally it's been at minimum $.30 for each upgrade. Over half of the stations are closer to $.40 for the mid-grade--->premium jump.
The days of the $.10 steps are long gone. Heck, the days of the $.20 steps are long gone as well.
Still pretty common near me. It's pretty clear that the price difference has little to do with actual costs. The pricing can be engineered for all sorts of things. I've heard some gas station owners price their fuel to barely make any profit for regular, but then make it up with premium. And of course the biggest profit center of any gas station these days is convenience store sales.
In CA I can only get E0 in quarts for $6-7 or a 5 gallon can for $70. Nothing at the pumps. Oddly enough in Iowa where they grow the corn for ethanol in fuel you can easily buy E0 at the pumps, and it's not much more than E10.
Kestas
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Originally Posted By: y_p_w
It's pretty clear that the price difference has little to do with actual costs.... I've heard some gas station owners price their fuel to barely make any profit for regular, but then make it up with premium.
From poking around the internet to understand this jump in price differential I've read the same thing. Additionally, they gouge people for premium fuel because they can. They believe people who drive premium fueled vehicles are driving upscale vehicles, have more money to spend, and thus can afford to pay what they charge for premium... not because it cost more to produce.
So screw them, I'm filling up with regular. All my vehicles have knock sensors.
Todd, you may want to read through the thread linked below. It shows you how to easily make pure gasoline by washing the ethanol out of it. It's easy to do and can save you from paying the 1000% markup you mentioned.
https://bobistheoilguy.com/forums/ubbthr...10?#Post2749602
It's pretty clear that the price difference has little to do with actual costs.... I've heard some gas station owners price their fuel to barely make any profit for regular, but then make it up with premium.
From poking around the internet to understand this jump in price differential I've read the same thing. Additionally, they gouge people for premium fuel because they can. They believe people who drive premium fueled vehicles are driving upscale vehicles, have more money to spend, and thus can afford to pay what they charge for premium... not because it cost more to produce.
So screw them, I'm filling up with regular. All my vehicles have knock sensors.
Todd, you may want to read through the thread linked below. It shows you how to easily make pure gasoline by washing the ethanol out of it. It's easy to do and can save you from paying the 1000% markup you mentioned.
https://bobistheoilguy.com/forums/ubbthr...10?#Post2749602
Over 60 cents a gallon more here in Florida.
Originally Posted By: Kestas
Originally Posted By: y_p_w
It's pretty clear that the price difference has little to do with actual costs.... I've heard some gas station owners price their fuel to barely make any profit for regular, but then make it up with premium.
From poking around the internet to understand this jump in price differential I've read the same thing. Additionally, they gouge people for premium fuel because they can. They believe people who drive premium fueled vehicles are driving upscale vehicles, have more money to spend, and thus can afford to pay what they charge for premium... not because it cost more to produce.
So screw them, I'm filling up with regular. All my vehicles have knock sensors.
Todd, you may want to read through the thread linked below. It shows you how to easily make pure gasoline by washing the ethanol out of it. It's easy to do and can save you from paying the 1000% markup you mentioned.
https://bobistheoilguy.com/forums/ubbthr...10?#Post2749602
There isn't necessarily any extra "cost" to making higher octane base fuel save maybe some of the cracking steps. Even those are going to go into all fuel grades as a blending component. It's really about how much is the customer willing to pay and what proportion of each can you make. Someone at the refinery is looking at the crude and thinking how much of this can we make into gasoline, how much into diesel and kerosene, how much into asphalt, and how much into lubricants.
As for trying to remove the alcohol, I'm not sure that's such a great idea with a car engine. Those guys were talking about doing that for power equipment, which typically has low octane requirement. The ethanol is integral to meeting the octane rating specified on the pump. There was a time when 87 octane at the pump was initially 87 octane fuel with up to 10% ethanol, but those days are mostly gone. Now it's something like 85 octane before blending, and the ethanol is required to bring the octane rating up to the expected number on the pump. They called the old practice "octane giveaway".
Originally Posted By: y_p_w
It's pretty clear that the price difference has little to do with actual costs.... I've heard some gas station owners price their fuel to barely make any profit for regular, but then make it up with premium.
From poking around the internet to understand this jump in price differential I've read the same thing. Additionally, they gouge people for premium fuel because they can. They believe people who drive premium fueled vehicles are driving upscale vehicles, have more money to spend, and thus can afford to pay what they charge for premium... not because it cost more to produce.
So screw them, I'm filling up with regular. All my vehicles have knock sensors.
Todd, you may want to read through the thread linked below. It shows you how to easily make pure gasoline by washing the ethanol out of it. It's easy to do and can save you from paying the 1000% markup you mentioned.
https://bobistheoilguy.com/forums/ubbthr...10?#Post2749602
There isn't necessarily any extra "cost" to making higher octane base fuel save maybe some of the cracking steps. Even those are going to go into all fuel grades as a blending component. It's really about how much is the customer willing to pay and what proportion of each can you make. Someone at the refinery is looking at the crude and thinking how much of this can we make into gasoline, how much into diesel and kerosene, how much into asphalt, and how much into lubricants.
As for trying to remove the alcohol, I'm not sure that's such a great idea with a car engine. Those guys were talking about doing that for power equipment, which typically has low octane requirement. The ethanol is integral to meeting the octane rating specified on the pump. There was a time when 87 octane at the pump was initially 87 octane fuel with up to 10% ethanol, but those days are mostly gone. Now it's something like 85 octane before blending, and the ethanol is required to bring the octane rating up to the expected number on the pump. They called the old practice "octane giveaway".
Originally Posted By: another Todd
In CA I can only get E0 in quarts for $6-7 or a 5 gallon can for $70. Nothing at the pumps. Oddly enough in Iowa where they grow the corn for ethanol in fuel you can easily buy E0 at the pumps, and it's not much more than E10.
E0 is higher by about 30-40 cents a gallon than E10 even in Iowa. Just filled with E0 last night and it was 40 cents more than E10. I hardly ever buy E0 except for vehicles that sit for extended periods or stored gasoline I use for various stuff around the property. I suppose it is odd that we have ethanol free all over the place as opposed to other areas of the country. We don't have stupid politicians here than refuse to give their citizens consumer choice. Even then, Iowans buy more ethanol laced fuel than ethanol free. Maybe because we have been using it since the 70's that we don't have the paranoia about it like some others do.
In CA I can only get E0 in quarts for $6-7 or a 5 gallon can for $70. Nothing at the pumps. Oddly enough in Iowa where they grow the corn for ethanol in fuel you can easily buy E0 at the pumps, and it's not much more than E10.
E0 is higher by about 30-40 cents a gallon than E10 even in Iowa. Just filled with E0 last night and it was 40 cents more than E10. I hardly ever buy E0 except for vehicles that sit for extended periods or stored gasoline I use for various stuff around the property. I suppose it is odd that we have ethanol free all over the place as opposed to other areas of the country. We don't have stupid politicians here than refuse to give their citizens consumer choice. Even then, Iowans buy more ethanol laced fuel than ethanol free. Maybe because we have been using it since the 70's that we don't have the paranoia about it like some others do.
Originally Posted By: Kestas
So screw them, I'm filling up with regular. All my vehicles have knock sensors.
Just because you have knock sensors doesn't mean the knock isn't causing negative effects. Noticeable reduction in overall fuel economy, performance, and excessive kr (knock retard) can occur if you vehicle requires or even recommends premium. Knock retard can only be compensated for so much with reduced timing. Having a knock sensor doesn't mean your engine will never knock, especially if you do not follow the manufacturers recommendation regarding fuel octane levels.
So screw them, I'm filling up with regular. All my vehicles have knock sensors.
Just because you have knock sensors doesn't mean the knock isn't causing negative effects. Noticeable reduction in overall fuel economy, performance, and excessive kr (knock retard) can occur if you vehicle requires or even recommends premium. Knock retard can only be compensated for so much with reduced timing. Having a knock sensor doesn't mean your engine will never knock, especially if you do not follow the manufacturers recommendation regarding fuel octane levels.
In this area, fuel prices stepped up .10/gal between grades for decades.
In recent years, the steps have gotten larger.
I suspect this is because RUG is a loss leader even if it is the largest seller and the margins on higher grades make up for this as do the convenience store sales. The charge for compressed air for tires is probably also a nice little money maker.
There was a time when almost every station had a couple of bays with lifts and a wrench or two. There was almost always also free air for your tires from the shop compressor.
These days, almost every station has a convenience store and I haven't seen a place that combines fuel sales with any sort of mechanical work in years.
In recent years, the steps have gotten larger.
I suspect this is because RUG is a loss leader even if it is the largest seller and the margins on higher grades make up for this as do the convenience store sales. The charge for compressed air for tires is probably also a nice little money maker.
There was a time when almost every station had a couple of bays with lifts and a wrench or two. There was almost always also free air for your tires from the shop compressor.
These days, almost every station has a convenience store and I haven't seen a place that combines fuel sales with any sort of mechanical work in years.
Originally Posted By: fdcg27
In this area, fuel prices stepped up .10/gal between grades for decades.
In recent years, the steps have gotten larger.
I suspect this is because RUG is a loss leader even if it is the largest seller and the margins on higher grades make up for this as do the convenience store sales. The charge for compressed air for tires is probably also a nice little money maker.
There was a time when almost every station had a couple of bays with lifts and a wrench or two. There was almost always also free air for your tires from the shop compressor.
These days, almost every station has a convenience store and I haven't seen a place that combines fuel sales with any sort of mechanical work in years.
I actually see a lot of traditional service stations. They don't seem to have a whole lot of parts any more, but I guess they'll have them delivered. Now I haven't seen one that will do tires any more. I remember over 20 years ago I needed a patch and a traditional service station could do it since one would typically have tire changing equipment. I haven't seen one with a rack of tires in maybe 15 years.
While most air setups in California have coin slots these days, it's supposed to be free for anyone who pays for fuel. I haven't actually paid just for air before. I asked about it once and was told don't worry about it as they consider it good will to let people have air. I've never been asked to show a receipt or insist that I pay for it.
I remember the days when air and water were available at the end of each island. That goes back to the days of full service, but that was still pretty common for years after self service became common. I don't know of any gas stations that still have full service, but I've seen mini service stations. On a trip through Oregon I wasn't allowed to touch the gas pump. I was allowed to clean my own windows.
There are even a few gas stations around here that don't have much of a convenience store and no service bays. A few have nothing but a small booth that might sell a bit of candy. They also sell tobacco, which I guess is still pretty profitable even though the taxes are high. I'm not quite sure what that does to their fuel prices. I sometimes go to this one station where the old service bay is leased to a smog check business. It gets really odd because the door is really close to one of the pumps, and whoever works there is always telling people lining up for gas to not block the entrance.
In this area, fuel prices stepped up .10/gal between grades for decades.
In recent years, the steps have gotten larger.
I suspect this is because RUG is a loss leader even if it is the largest seller and the margins on higher grades make up for this as do the convenience store sales. The charge for compressed air for tires is probably also a nice little money maker.
There was a time when almost every station had a couple of bays with lifts and a wrench or two. There was almost always also free air for your tires from the shop compressor.
These days, almost every station has a convenience store and I haven't seen a place that combines fuel sales with any sort of mechanical work in years.
I actually see a lot of traditional service stations. They don't seem to have a whole lot of parts any more, but I guess they'll have them delivered. Now I haven't seen one that will do tires any more. I remember over 20 years ago I needed a patch and a traditional service station could do it since one would typically have tire changing equipment. I haven't seen one with a rack of tires in maybe 15 years.
While most air setups in California have coin slots these days, it's supposed to be free for anyone who pays for fuel. I haven't actually paid just for air before. I asked about it once and was told don't worry about it as they consider it good will to let people have air. I've never been asked to show a receipt or insist that I pay for it.
I remember the days when air and water were available at the end of each island. That goes back to the days of full service, but that was still pretty common for years after self service became common. I don't know of any gas stations that still have full service, but I've seen mini service stations. On a trip through Oregon I wasn't allowed to touch the gas pump. I was allowed to clean my own windows.
There are even a few gas stations around here that don't have much of a convenience store and no service bays. A few have nothing but a small booth that might sell a bit of candy. They also sell tobacco, which I guess is still pretty profitable even though the taxes are high. I'm not quite sure what that does to their fuel prices. I sometimes go to this one station where the old service bay is leased to a smog check business. It gets really odd because the door is really close to one of the pumps, and whoever works there is always telling people lining up for gas to not block the entrance.
Originally Posted By: fdcg27
I suspect this is because RUG is a loss leader even if it is the largest seller and the margins on higher grades make up for this as do the convenience store sales.
Considering that RUG is approximately 80% of all gasoline sold, I highly doubt they are losing money on that product and trying to make it up on the remaining 20%. Do you have any sort of backup for that claim?
No company I've ever worked for intentionally lost money on 80% of their products only to try and make it up on the remainder.
I suspect this is because RUG is a loss leader even if it is the largest seller and the margins on higher grades make up for this as do the convenience store sales.
Considering that RUG is approximately 80% of all gasoline sold, I highly doubt they are losing money on that product and trying to make it up on the remaining 20%. Do you have any sort of backup for that claim?
No company I've ever worked for intentionally lost money on 80% of their products only to try and make it up on the remainder.
Originally Posted By: kschachn
Originally Posted By: fdcg27
I suspect this is because RUG is a loss leader even if it is the largest seller and the margins on higher grades make up for this as do the convenience store sales.
Considering that RUG is approximately 80% of all gasoline sold, I highly doubt they are losing money on that product and trying to make it up on the remaining 20%. Do you have any sort of backup for that claim?
No company I've ever worked for intentionally lost money on 80% of their products only to try and make it up on the remainder.
It may not be correct to say that anyone is losing money specifically on regular unleaded. It's more complex than that. You'd have to be privy to their franchise agreement for the terms for which they purchase fuel, or how much spot fuel costs the owner.
Different grades of fuel certainly don't "cost" much more to produce. Refining is just a factor of separating different components into "buckets" and then blending them to make a final product. Pricing is really a matter of scarcity and demand for a particular end product.
Certainly there are companies that sell products made in different places where there are different production costs. Sometimes the products are sold at the same price. This isn't necessarily being a loss leader, but there are legitimate reasons for having multiple production facilities. Making money can be more systemic. The overall profit or loss is more important than whether or not one can attribute a higher (if any) profit to one production location. A gas station's revenue stream has got to be more complex than saying we make 2 cents per gallon selling regular, 15 cents a gallon selling premium, and this much per month selling donuts.
Originally Posted By: fdcg27
I suspect this is because RUG is a loss leader even if it is the largest seller and the margins on higher grades make up for this as do the convenience store sales.
Considering that RUG is approximately 80% of all gasoline sold, I highly doubt they are losing money on that product and trying to make it up on the remaining 20%. Do you have any sort of backup for that claim?
No company I've ever worked for intentionally lost money on 80% of their products only to try and make it up on the remainder.
It may not be correct to say that anyone is losing money specifically on regular unleaded. It's more complex than that. You'd have to be privy to their franchise agreement for the terms for which they purchase fuel, or how much spot fuel costs the owner.
Different grades of fuel certainly don't "cost" much more to produce. Refining is just a factor of separating different components into "buckets" and then blending them to make a final product. Pricing is really a matter of scarcity and demand for a particular end product.
Certainly there are companies that sell products made in different places where there are different production costs. Sometimes the products are sold at the same price. This isn't necessarily being a loss leader, but there are legitimate reasons for having multiple production facilities. Making money can be more systemic. The overall profit or loss is more important than whether or not one can attribute a higher (if any) profit to one production location. A gas station's revenue stream has got to be more complex than saying we make 2 cents per gallon selling regular, 15 cents a gallon selling premium, and this much per month selling donuts.
No one, including the station is losing money on RUG. It may not be a large margin but they aren't losing money and making it up on donuts.
Originally Posted By: SatinSilver
Station owners have a gross profit of 7-10 cents per gallon of regular gas sold.
LINK
As elaborated in the article, that 7-10 cents is not profit. it is revenue. After they expense what it takes to actually run the station and meet payroll, it can get down into the 1-2 cent range for actual profit. I have tanked fuel in years gone by and dealt with a lot of station owners. Fuel sales profits are razor thin. They may not be losing money, but it sure isn't making them Bill Gates. It is the convenience store portion of the station that brings in a better margin.
Station owners have a gross profit of 7-10 cents per gallon of regular gas sold.
LINK
As elaborated in the article, that 7-10 cents is not profit. it is revenue. After they expense what it takes to actually run the station and meet payroll, it can get down into the 1-2 cent range for actual profit. I have tanked fuel in years gone by and dealt with a lot of station owners. Fuel sales profits are razor thin. They may not be losing money, but it sure isn't making them Bill Gates. It is the convenience store portion of the station that brings in a better margin.
Which is why I mentioned gross profit and not net profit.
It's not a matter of losing money on the sale of RUG, rather it's a matter of accepting very low margins in return for the high margin convenience store traffic.
This is why stations without convenience stores are so rare these days and also why few convenience stores without gas stations exist anymore.
The price on the sign out front is what brings the trade in.
The high markups on the chips and pop are what make the station money.
Without the gas, you wouldn't have people coming in to pay 6X grocery store prices for a Mountain Dew and a mini bag of Doritos. The gas stop is also so darn convenient for those needing lottery tickets, beer or cigarettes. After all, you're already there.
Marketers have more than one way of making money.
This is why stations without convenience stores are so rare these days and also why few convenience stores without gas stations exist anymore.
The price on the sign out front is what brings the trade in.
The high markups on the chips and pop are what make the station money.
Without the gas, you wouldn't have people coming in to pay 6X grocery store prices for a Mountain Dew and a mini bag of Doritos. The gas stop is also so darn convenient for those needing lottery tickets, beer or cigarettes. After all, you're already there.
Marketers have more than one way of making money.
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