Cars and Drivers

Do You Really Need to Pay the Price for Premium Gasoline?

Paul Ausick

Published: December 12, 2017 5:30 am

Last Updated: January 12, 2020 5:33 am

Pump prices for gasoline have risen for several months now as the production cuts instituted by OPEC and its partners have begun to force consuming nations to draw down oversupplied inventory to meet rising demand. Depending on where you live, gas prices are anywhere from around 23 cents to 44 cents a gallon higher today than they were a year ago.

And that’s for regular grade (87-octane) gasoline. The price of higher octane (91-octane) premium gasoline is around 50 cents a gallon more than the price of regular. That leads to three questions: why the big price difference between regular and premium; does using premium — if recommended by the vehicle maker — improve fuel economy; and does using premium — again, if recommended — improve a vehicle’s performance (as measured in horsepower).

These were the three primary questions AAA researchers were asking in their new report using manufacturer-recommended premium fuel. Two of the six test vehicles had V-8 engines — the Escalade and the Mustang — while three others — the Renegade (turbocharged), the A-3 (turbocharged) and the Mazda MX-5 Miata — had in-line four-cylinder engines, and the F-150 had a turbocharged V-6.

If the vehicle maker recommends regular fuel, using premium gas in that vehicle does not provide any quantifiable benefit in terms of either fuel economy or performance. In a study released last year, AAA found that consumers wasted nearly $2.1 billion dollars fueling these vehicles with higher-octane gasoline.

If the manufacturer specifically requires premium gasoline, AAA concludes that drivers should use premium fuel to avoid potential engine damage that may not be covered by the manufacturer’s warranty. Think of it as an insurance policy.

But when it comes to using premium gasoline when recommended by the automaker, in most cases the benefits do not offset the extra cost of the fuel. In AAA’s words, “Vehicles labeled premium recommended can safely use regular gasoline (87 octane) with no adverse effects.” One exception might be vehicles that make a “pinging” or “knocking” sound while using regular gasoline. These vehicles should be evaluated by a repair facility and likely switched to a higher-octane fuel.

Most vehicles tested by AAA showed a modest performance improvement when using premium fuel and most vehicles also showed a modest improvement in fuel economy with premium gas, if the manufacturer recommended using premium fuel.

How much of a performance improvement? On a Ford F-150 pickup burning premium gas will boost the horsepower by 2.1%, while on a Ford Mustang horsepower rises by 3.2%. On a Jeep Renegade, horsepower dips by 0.3%.

The gains in fuel economy are equally modest. On a Cadillac Escalade SUV, premium gas yields 7.1% better average miles per gallon (mpg). On the F-150 the mpg boost is 5% and the Jeep Renegade gets a 1.9% increase in mpg. An Audi A3, however, will get 1% fewer mpg on premium fuel.

Concerning the cost of premium fuel, AAA said:

Following more than ten years with a seemingly inelastic price differential of 10% for premium gasoline, the cost of premium has risen steadily since 2010. The price differential for premium peaked near 30% in 2016 and has since remained in the 20% to 25% range.

The math is obvious: if premium fuel costs 20% more and the fuel economy gain is only 2.7% (the average for the six vehicles AAA tested), then the cost of the fuel will never be anything but a money sink.

Calculating the payback for improved performance results in an even weaker case for using premium fuel. The average horsepower boost over all six cars tested was a measly 1.7%.

The researchers concluded:

The fuel economy improvements recorded during AAA testing do not offset the potential extra cost to purchase premium gasoline.

Here’s how the six test vehicles performed in miles-per-gallon testing and the overall cost to consumers who used premium gas when it was recommended, but not required, by the manufacturer:

Ford F-150
> EPA combined mpg: 21
> MPG improvement with premium fuel: 22 (5.0%)
> Difference in annual cost for premium fuel: $347
> Adjusted cost to use premium based on mpg difference: $248

Cadillac Escalade
> EPA combined mpg: 17
> MPG improvement with premium fuel: 18.2 (7.1%)
> Difference in annual cost for premium fuel: $429
> Adjusted cost to use premium based on mpg difference: $258

Mazda MX-5 Miata
> EPA combined mpg: 24
> MPG improvement with premium fuel: 24.2 (0.7%)
> Difference in annual cost for premium fuel: $304
> Adjusted cost to use premium based on mpg difference: $291

Audi A3
> EPA combined mpg: 27
> MPG improvement with premium fuel: 26.7 (−1%)
> Difference in annual cost for premium fuel: $270
> Adjusted cost to use premium based on mpg difference: $287

Ford Mustang
> EPA combined mpg: 18
> MPG improvement with premium fuel: 18.4 (2.3%)
> Difference in annual cost for premium fuel: $405
> Adjusted cost to use premium based on mpg difference: $349

Jeep Renegade
> EPA combined mpg: 26
> MPG improvement with premium fuel: 26.5 (1.9%)
> Difference in annual cost for premium fuel: $280
> Adjusted cost to use premium based on mpg difference: $249

Finally, one of the first questions we noted is why the price difference between regular and premium gasoline. There are basically four reasons for the higher price of premium:

Increased processing of lighter crude oil. Most of the crude oil produced in the United States is light (less viscous) and sweet (low sulfur) and produces a refinery stream of fairly low octane product called light straight run (LSR). To raise the octane rating, more expensive refinery products have to be added to the LSR to boost the octane rating, which pushes up the pump price of the fuel.

EPA Tier 3 requirements. As of January 2017, the EPA has required that the sulfur content of all U.S. fuel be less than 10 parts per million. This lowers the octane rating and requires refiners to add more of the higher octane components.

Consumer preference. Some drivers simply prefer to use the higher octane fuel. Even though gas prices are higher than they were a year ago, enough drivers are happy to pay premium gasoline’s even higher price because they believe it improves either their vehicle’s performance or its fuel economy. If demand for premium fuel rises, so do prices.

CAFE standards. Corporate average fuel economy (CAFE) standards are rising, leading carmakers to design new, higher-compression engines that require higher octane fuel. The good news is that these engines are more efficient (use less gasoline) and cleaner (emit less carbon dioxide).

Again, if the owner’s manual states that the vehicle requires premium-grade fuel, you should use it. Otherwise the cost outweighs the fuel-economy benefits and the almost negligible performance gains.

For the full AAA report with more detail and a list of vehicles that only recommend but do not require premium fuel, visit the AAA website.

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