Demand for premium gas trickles off


NEW YORK - Demand for premium unleaded gasoline, one of the oil industry's most profitable products and the crown jewel of its marketing effort, has declined sharply, perhaps by 20 percent from 1990.

When retail gasoline prices spiked after the invasion of Kuwait and premium crossed $1.50 a gallon, "people just absolutely quit buying the stuff," said Jim Snyder, regional manager for Ashland Oil Co. in Baltimore.

"You're seeing supply and demand at work," said George Shackelford, business manager of light products for Amoco Oil Co., Chicago.

He estimates that industrywide, demand for premium grade gasoline is off about 15 percent to 20 percent for the first few weeks of 1991 compared with a year earlier. He declined to specifically discuss Amoco's sales.

Other industry executives say volume may be off as much as 30 percent because motorists have shifted their buying to unleaded regular and mid-grade fuel.

In contrast, overall gasoline demand for 1990 was down by about 2 percent compared to 1989. Fourth quarter demand dropped 3 percent, industry sources say.

An indicator of the lack of demand for premium grade can be seen on the New York Harbor and Gulf Coast markets for barge lots tendered for immediate delivery, the so-called spot market.

The differential between unleaded regular and unleaded premium grade gasoline dwindled to a minuscule half cent a gallon this week.

The spread rose steadily through late spring and early summer, hitting 16 cents in early July and again in mid-August.

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