Tuesday, February 14, 2012

Gas Prices and Fuel Grades

Gas prices are on the way up again. (Although I don't hear the Pres. Bush haters blaming Pres. Obama for his corporate connections.  I don't suppose that they are hypocritical?  It couldn't possibly have just been political?) 

One of the side effects of increasing gas prices is the decreasing relative price difference between the grades of fuel.  From reviewing historical price data, in November, 1994, regular gas was $1.08, midgrade $1.17, and premium $1.27.  On January 30, 2012, the fuel prices are regular $3.44, midgrade $3.57, and premium $3.72.  So the difference in 1994 between regular and premium was a 17.6% increase.  In 2012, the increase is just 8.1% increase. 

At some point, I started buying midgrade gas instead of regular.  When it was $1.17, the increment for 10 gallons of gas was 90 cents.  However, currently, the increased cost is $1.30.  But since, I would only have been paying around $10 to fill up, another $1 seemed like a significant increase.  Now, I'm paying around $35.70, so the increased $1.30 doesn't seem like such a big deal.  I suppose if I were filling up once a week, that would add up to enough to take notice.

I'm wondering though, if this behavior change occurs more than just in my car.  Now, my car's engine is spec'ed to run just fine with regular octane, so I didn't have to make the change for that reason.  Of course, if I could buy gas without ethanol, I'd take that trade.  Cheaper to start, a gallon of gas would go further, and food costs would be lowered.  Wait, is there a trade off?  Oh yeah, I'd have to hear how environmentalists were complaining, and laugh.

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