Originally Posted By: SatinSilver
Reg gas a small markup but they make their money with volume. If they make .10 per gallon net profit but sell one million gallons then their profit is $100,000.00. On the premium they may make .50 net profit but only sell 200,000 gallons and they end up making a $100,000.00 profit.
You are saying that the premium has a higher profit margin due to smaller demand.
The one trend that I notice in Michigan is that when gas prices skyrocket ($3.50+), then the difference between the two grades is consistently smaller, usually around ten to fifteen cents. Why is this? Does the current high difference equal price gouging or are there other logical explanations in addition to SatinSilver's? Do they adjust the profit margin to what they think consumers will tolerate?