Frequent Env-Econ reader and longtime (very longtime) friend, Chuck, called me this morning while idling in Atlanta traffic. His question:
I have to buy premium gas for my car. Up until about six weeks ago there was always a fixed $.10 jump in prices between grades: for example, regular unleaded would be $2.05, mid-grade would be $2.15 and premium would be $2.25. Lately, though, the premiums seem to jump around, ranging anywhere from $.10 to $.25. What has changed recently to cause gas price premiums between grades to change?
Um, I don't know. My initial reaction was it has something to do with the switchover from MTBE to ethanol as an additive combined with the relatively more elastic demand for premium gas, but I'm not convinced.
So I turn to the smartest readers in the blogosphere (um, yeah, I'm talking about y'all and hoping flattery helps). Any ideas why gas pricing strategies on higher grade fuels have changed? Or any evidence that this is going on in other parts of the country?
