Chavez why is premium gas so expensive mailbag gas zone pricing


In your research you may want to review Wisconsin’s minimum markup law regarding fuel. The price at the pump must be generated from the average inventory. If you don’t receive cheaper premium from the terminal, you can’t mark it down in proportion with the cheaper regular. Also consider if you ask a station attendant at a station with less expensive premium about their competitors high price, you’ll likely get the "they’re ripping you off" answer. If you ask a station attendant at a station about their competitors low price, you’ll likely get "they’re giving it away to steal my business". Instead of deciding who is right, factor in each is biased and has no tangible data to back it up the claim. It really is the market. If you think the price is too high, go elsewhere. Shaming business owners in a letter to the editor because you don’t like their price, without considering what drives the price, just seems a bit short sighted.

As a consumer you have the right to buy (or not buy) fuel from any vendor. You should exercise that right. You also have a right to draft general letters to the local paper. Only one of these exercises will yield you financial relief. The smart move is to buy fuel at the best price you can.

Reasonable one, I understand your perspective. I also see the invoices from the bulk plants where the retail stations receive their fuel. To note, the vast majority of fuel in our market comes from 3 major bulk plants. The gap between premium and regular at the pump reflects the cost from the wholesale fuel price.

When bulk fuel prices go up on regular, they also go up in mid grade and premium. When they go down on regular the price on midgrade and premium drops at slower rate because it takes the station 12x as long to cycle out the high priced premium. Unlike a regular retail goods store, they don’t run a close out sale to get rid of the product below cost. To do so would be a violation of Wisconsin trade law.

Another detail to consider is where you buy your fuel. It’s common for independent stations in urban areas to go through their premium at an even slower rate. This amplifies the effect and creates a longer delay for the mid grade and premium price to drop. This explains why higher volume stations like Kwik Trip typically see a smaller gap between grades.

Accusing a business of ripping people off is pretty harsh. In this case It’s an assumption not based in fact. There may be individual instances, but there really is no conspiracy to gouge premium fuel buyers. It is a fickle business. If any one of the independent station could drop their price by a dime to undercut their competitor, the would (and do).

Also, you may want to read your vehicle owners manual. Premium, mid grade and regular are generic terms. (You’ll notice some stations offer Silver, Gold, platinum, super-premium, Ultra, etc.) Octane ratings for a premium product can vary significantly. In Racine you’ll find 93 premium with ethanol. In other counties you can find 91 premium without ethanol. Both labeled premium but different octane ratings. If the recommended octane from your car is 89, midgrade is sufficient. If you introduce 87 regular into the a car that recommends a higher octane the Fuel Injection system retards the timing to reduce knocking under load. You may hear the argument that mileage will drop off, but the number is negligible if at all detectable. Again, there are exceptions. High compression, high horsepower performance engine may require a higher octane rating, but this is a small portion of vehicles. Putting any octane higher yields no benefit. There is a difference between "recommended" and "required". Ask your mechanic what they put in their car.

You may not like my answers but you really may want to consider that while you are the victim of the market, you are not being victimized by the gas station per se. I’d argue that you are more likely to get "ripped off" when you go in to buy soft drink for $2 that they purchased at Woodman’s or Sam’s club and for .75, but that is a different subject.

You’re likely going to find more stations that only offer regular 87 (no premium or mid grade) in the future because of the low premium sales. Milwaukee and Waukesha already have a few. If it becomes commonplace, the conditions you are concerned about may be reduced, but you’ll have fewer places offering the fuel you want (but may not necessarily need).

MT. Pleasantly, Thanks for the commentary. Can I get some of that Kool-Aid? You state that you see invoices. Would that be for one chain or one location? You may be aware that stations may have partitions in their tanks that allow them to purchase smaller quantities that will not separate or get "old" and they can then more quickly react to the market. Some of us have read our owners manual as I have. I happen to have more than one vehicle that REQUIRES 91 octane fuel. I have also seen 1st hand what happens to an engine that REQUIRES premium fuel and regular is ran through it for 80K miles even with knock sensors that retards timing. Luckily, that was not my vehicle nor will it be. Fortunately, I am more well versed about the needs of my vehicles than most and do not have to confer with my mechanic. In fact, it is routine that I am aware of what is wrong with my vehicle prior to taking it to be repaired. At this point, I will be more vigilant on which stations will get my business. As far as your comment on ethanol, I can only assume that you also believe there is no drop in performance/mileage when using it. There are those that will disagree with that as well.