Gasoline Marketing: Premium Gasoline Overbuying May Be Occurring, but Extent Unknown.
GENERAL ACCOUNTING OFFICE WASHINGTON DC RESOURCES COMMUNITY AND ECONOMIC DEVELOPMENT DIV
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Consumers have the option of purchasing several different grades of unleaded gasoline-regular, mid-grade, and premium-which are classified according to an octane rating. Because of your concern that consumers may be needlessly buying higher priced premium unleaded gasoline for their automobiles when regular unleaded gasoline would meet their needs, you asked us to determine 1 whether consumers were buying premium gasoline that they may not need, 2 whether the higher retail price of premium gasoline includes a price mark-up added between the refinery and the retail pump which is greater than that included in the retail price for regular gasoline, and 3 possible reasons for the price differences between premium and regular gasoline. Although not conclusive, indications are that consumers may be overbuying premium gasoline. For example, both government and industry studies show that premium gasoline sales, as a percentage of gasoline sales, exceed the percentage of vehicles on the road that require premium gasoline. Further, consumers choice of premium gasoline may in some instances depend on price rather than need. This is illustrated by industry information showing that the increased price of premium gasoline since the August 2, 1990, Iraqi invasion of Kuwait resulted in a significant drop in premium gasoline sales. If consumers choose to buy premium gasoline that is not needed for their automobiles, it could be costing them millions of dollars each year.