Why is premium gas so expensive? More Americans are filling their cars with it

Key Points:

• Premium gasoline prices have surged to around $1 more per gallon than regular gas, a significant increase from the historical 20-cent difference, driven largely by gas stations' pricing strategies rather than wholesale costs.
• Demand for premium gas has risen, accounting for about 13% of sales last year, partly due to more new vehicles recommending or requiring higher octane fuel, especially luxury cars and large SUVs.
• Many drivers purchase premium gas under the mistaken belief that it improves engine performance, despite evidence showing no benefits for cars designed to run on regular 87-octane fuel.
• The premium gas market has been shaped by a century of marketing, starting with the introduction of tetraethyllead additives and evolving through advertising of detergents and higher octane levels, creating a perception of superior quality.
• While premium gas benefits engines that require higher octane to prevent knocking, most vehicles do not need octane levels above 91, making the higher-priced 93 or 94 octane fuels largely a marketing tactic.