Why midgrade gas is a myth
Why midgrade gas is a myth
3:32

Why midgrade gas is a myth

Cars
[MUSIC] Hey folks, Cooley again, got another email from you about high tech cars and modern driving. This one comes in from Aaron F in Texas, who's responding to a piece we just did about how car markers wanna go to premium fuel only. And part of their rationale is, you'll get better MPG, but we'll also see better gas prices because the fuel companies won't have to refine so many grades. But Aaron's got an interesting take on that. Regarding the blending of three grades versus one, I used to be a LUST (Leaky Underground Storage Tank) site manager and can tell you that every gas station I dealt with in Texas and Washington only had a tank of regular and a tank of premium in the ground, and they were mixed, going to the pump to make midgrade. The only time he says I ever saw a gas station with more than two tanks in the ground was when they were doubling up on 85 or they sold diesel. This is a really interesting topic Aaren this idea that we've got this midgrade charade out there. What is midgrade fuel? It's not actually often made at the refinery as you point out. Ever since 1988, the EPA has been going after the underground storage tanks which you used to work on to make sure they weren't leaking. A lot of them had to be replaced. You probably saw your local gas station get dug up in the recent years or maybe the last decade or so. In that process, they typically put in a regular tank, a premium tank And the midgrade was blended on site by the pumping system. It's a technique they call splash blending, it's not done at the refinery. They just make two grades. It's done right there at the point of sale. Here's a trick for the penny pincher, blend your own. At least in some markets midgrade costs more than the cost of filling your own tank half with regular and half with premium. Making your own splash blended midgrade in the tank. A spot survey of station's near us around San Francisco found that you can save five or ten cents a gallon if you need midgrade and are ready to roll your own. I know people who will drive miles to save that on gas. Now this all becomes interesting because part of the saving Of auto makers wanting to move to almost all cars using premium in the future, would come from the fact that premium, they say, can deliver a 3 to 4% MPG increase very quickly. That, by the way, is huge. That may look like small numbers, but to gain 3 to 4% MPG on cars widely is amazingly big. 1% is considered pretty chunky. The problem is, how do we all pay for that? Because right now, if you look at the cost of average on what we pay for fuel, versus premium, it's 19% more for premium. And if you compare regular to premium around the country, it's 24% more. So, a 4% bump for a 24% price increase isn't gonna pencil out for a lot of consumers. RIght? That just doesn't make sense. So part of the efficiencies here are supposedly that refiners will have a simpler mix of fuels to make. It just starts to fall down though when you realize they're only making two grades now anyway. A lot of cars are going to still need mid-grade going forward, and so that means, what, 20 more years of making that available, and making regular available, because the fleet doesn't turn over that fast. And I start to get a little bit skeptical as to whether or not this whole cost thing can [UNKNOWN] out on mid-grade. We'll stand on top of this story and let you know if this is gonna move and get real traction between the automakers, regulators, and the refining industry. It touches all of us except you Tesla drivers. Keep those emails coming. I'm here to answer your questions about hi-tech cars and modern driving. It's cooley@theroadshow.com.

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