MIAMI BEACH, Fla. -- Demand for high-octane fuel is at its lowest in nearly a quarter of a century and is now primarily consumed by a core group of luxury vehicle owners—and even some of them are putting lower-grade fuel into their tanks to save money, according to an Associated Press report.
In 1997, high-octane garnered 16% of the nationwide fuel market share, according to figures from the U.S. Energy Information Administration (EIA). Last month, premium had only 8% of the market. Last year, premium gasoline consumption fell to about 35.6 million gallons of gas per day, the lowest [image-nocss] in 24 years, the agency said.
"We're down to the core, die-hard audience that believes they need 93," Tom Kloza of the Oil Price Information Service told the news agency.
Gas station owners say they are pumping so little premium that it can take three or four weeks to sell their high-octane inventory, as opposed to a couple of days for a delivery of regular gasoline.
"The reality is, when you're having to make a choice between food and fuel, all of a sudden you'll make a decision to give up the benefits of the higher product," Sonja Hubbard, CEO of E-Z Mart Inc., a Texarkana, Texas-based company that owns 307 convenience stores in Texas, Arkansas, Oklahoma, Louisiana and Missouri, told AP. Premium gasoline is making up only 3.3% of E-Z Mart's gasoline sales this year, Hubbard said.
Station owner Rob Garrett of Centreville, Va., said the decline in premium sales hurts his profits. "The shift from higher grade, higher profit products will decrease my margin," he told AP. He estimated that sales of premium have decreased 10% to 15% since last year at his three locations.
Jessica Caldwell, an auto industry analyst with the car-buying resource Edmunds.com, said consumption of premium has fallen because people are driving less overall and more people are buying compact cars that don't need high-octane fuel. She pointed out that most premium fuel is 30 or 40 cents a gallon more than regular—meaning that cutting it out would only save a few dollars per tank. "It really doesn't add up to very much," she said. "It's more of a psychological thing. You're at the pump, and it seems like every time you hit a certain threshold, you cringe."
Some motorists feel they have no choice but to pump premium. The number of new models that manufacturers say should use high octane—mostly luxury sedans and high-performance sports cars—has risen from 166 in 2002 to 282 this year, according to the Kelley Blue Book, an Irvine, Calif.-based company that provides vehicle value information.
There is some debate over whether premium is really necessary for all but a few models, said AP. It said Consumer Reports wrote this month that motorists should not waste money on premium if their owners manual says the vehicle takes regular—the car will not run better. The magazine also says many cars that are supposed to only use premium perform just as well with regular.
Jeff Lenard, a spokesperson for the National Association of Convenience Stores (NACS), said the biggest shift over the last year had been to midgrade from premium. According to a report in the New York Times, in the association's survey of 3,368 c-stores that sell gasoline, premium sales in March were 0.4% lower than in April 2007, measured by volume, and sales of regular gasoline nationally fell by 1.4%. But midgrade volume rose 15.6% in that time, he told the newspaper.
John Watts, the owner of Watts Petroleum in Lynchburg, Va., a wholesaler, told the paper that he is delivering far more regular gasoline than ever. He said he had also been getting many more calls from station managers who wait until the last minute to order because they do not want to buy more than they need, because the prices—even for regular—are so high.
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