Anyone knows how this works?

[Middleoftheroad]

Recently I arrived back home from a short trip to Iowa. While there I filled up on gas only one time, but when I did, I saw something that caught my eye. The price.
Unleaded 87 $3.47 a gallon
Super unleaded 89 $3.31 a gallon

89 cheaper then 87? This was at the same gas station, so that can't be the reason. I did notice that under the 89 it said it contains 10% ethanol, while saying nothing under then 87. I also know that Iowa contains a lot of corn fields.

Is the difference in price because the ethanol is cheaper there? Maybe there is a local ethanol plant that can produce it cheaper then importing in gas from a refinery that might be further away. I really have no idea, just guesses, does anyone know why this is the case?

 

[Nova78]

I ts cheaper because of government subsidies in Iowa.

 

[Middleoftheroad]

It seems to me that there must be other reasons, using a little quick math and a few educated guesses I've come up with this. Assuming that going from 87 to 89 is usually a minimum of a 10 cent increase (we will assume 10 cents), we come up with 89 should cost 357 (347 +10). Instead we see it selling at 331 which is a discount of 26 cents a gallon. Just for using 10% ethanol. So we figure that the ethanol is being sold per gallon at 93 cents a gallon (357 - (26 X 10)).

Yet, this can't be true since the station there also sold E-85. I don't remember the exact cost, but I would remember if it was close to $1/gallon. It wasn't. I'm positive I would remember if it was below $2/gallon and I don't remember that either.

The problem becomes even greater if you assume that 89 usually is 15 cents more then 87, then you would have ethanol selling at 43 cents a gallon. Something doesn't add up.

 

[CZKG_Crockett]

it's not always cut and dry like that. They might have been gettin a shipment of new gas in the next few days and wanted to clear as much of their tanks as possible. There's a station near where I work where they do that every other week. They'll drop the price of gas almost 15 cents. After they get filled up, they go back up to the local norm and wait another two weeks to do it again.

 

[konradv]

The 89 octane gas is usually called "plus", not "super", that's 93.

This isn't actually on-topic, but I wonder why anyone buys 89 octane? It's usually about 20 cents more expensive than regular, but only 10 cents cheaper than super. If the prices were $3.50, $3.70 and $3.80, for example, you could put in two gallons of regular for every gallon of premium and end up at 89 octane, while only paying $3.60/gallon!

 

[lectricgenius]

Some people like my 89 y/o grandfather must buy it because their cars call for such-- if he tries to burn the cheap stuff it knocks really badly. Kind of reminiscent of the Leaded gasoline days whenever you would try to burn the non-leaded stuff you suffered the same fate, because the lead was what boosted the octane rating up.

But I am in agreement with most people here, probably due to the Iowa government backing ethanol so strogly