Gasoline Marketing:

Premium Gasoline Overbuying May Be Occurring, but Extent Unknown

RCED-91-58: Published: Feb 26, 1991. Publicly Released: Mar 7, 1991.

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Pursuant to a congressional request, GAO determined: (1) whether consumers were needlessly buying premium gasoline; (2) whether the higher retail price of premium gasoline included a greater price mark-up than that included in the retail price of regular gasoline; and (3) possible reasons for the price differences between premium and regular gasoline.

GAO found that: (1) premium gasoline sales exceeded the percentage of vehicles that required premium gasoline; (2) government and industry studies, although not conclusive, indicated that consumers might be overbuying premium gasoline; (3) although consumers perceived premium gasoline to be a better product, fewer of them were willing to substitute it for a lower octane fuel when prices rose substantially; (4) the price difference between premium and regular gasoline was the same at the refinery and the retail pump; and (5) additional processing costs, better detergent additives, and increased advertising contributed to the higher price of premium gasoline.

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