The Price of Premium Gasoline Is Going Up, And There's No Easy Cure

Photo: Sean Gallup / Staff (Getty Images)

If you’ve noticed the gap between the cost of regular and premium gas getting wider, you’re not imagining things. Premium gas is getting disproportionately more expensive. Sadly, there isn’t necessarily one specific cause to the issue — Russia’s war in Ukraine, the impacts of environmental regulations and limited refining capacity all appear to be factors, meaning there’s not likely to be a quick cure.

Bloomberg reports that the average difference in price between regular and premium gas is now about 75 cents in the U.S., which is 15 percent higher than it was this time last year. At least it’s not as bad as it is in the U.K, where the difference between premium and regular gasoline is 25 percent higher than it was a year ago. And odds are good that things will only get worse as we head into the summer.

“The current record seasonal strength in octane pricing doesn’t portend well to a smooth transition to summer-specification gasoline,” Callum Bruce, an analyst at Goldman Sachs, told Bloomberg.

Bans on the seaborne importation of Russian petroleum have meant that there’s significantly less naphtha, an important part of making gasoline, to go around. On top of that, the U.S.’s Tier 3 regulations require gasoline to contain less sulfur, but the process of making low-sulfer gasoline reduces octane, making high-octane premium fuel more expensive to produce.

“Meeting lower sulfur requirements comes at the expense of octane levels, which likely contributed to soaring prices for high octane blending components. This dynamic should continue in 2023 and may lead to similar explosive upside in gasoline prices this summer,” Bank of America recently noted.

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If there’s any good news here, it’s that RBN Energy analyst Robert Auers reportedly believes the biggest issue is a lack of refining capacity. And since new refineries should begin operating later this year, we could see the price jump from regular to premium gas start to fall. But in the near term, prepare to pay a good bit more if your car needs premium.