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IPFS News Link • Energy

Are Premium Gas Pumps a Scam?

• By The Alternative Daily

In January, gas prices hit their lowest levels since 2009. Logically this should mean American consumers are enjoying equivalent savings at the pump. However, according to a study by investment bank JP Morgan, the price of gasoline has dropped more than 30 percent over the last year while the average consumer has only enjoyed 16 percent savings.

While a decrease in gas prices does lead to an increase in miles driven, this increase is not enough to explain the gap between prices and savings. Instead, according to economists Justine Hastings and Jesse Shapiro, it appears that when gas prices go down, America's drivers start to buy the "good" stuff — premium gasoline. Premium gasoline saw a 13 percent increase in demand from 2014 to 2015, while regular gasoline only saw a 3.6 percent bump.

The "premium" in premium gasoline, however, refers to a higher octane level. While regular gasoline has an octane level of 87, premium gasoline typically has an octane level of 93. The higher octane level is necessary for cars with high volume cylinders because it is able to withstand more compression before igniting. In older cars, a lower octane level fuel could cause the engine to "knock" or "ping" as a result of the fuel igniting too soon.


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