Gasoline prices tied to ethanol, EIA states

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WASHINGTON, May 7 (UPI) -- The difference between premium and regular unleaded gasoline prices in the United States is a reflection of ethanol blends, the U.S. Energy Department said.

Motor group AAA reports that U.S. consumers paid, on average, $3.52 for a gallon of regular unleaded gasoline Tuesday, compared with $3.85 for a gallon of premium gasoline.

The price spread of about 30 cents has been static since the end of 2012 but, on a percentage basis, the U.S. Energy Department's Energy Information Administration said the difference has held steady since 2009.

On a percentage basis, the EIA said the price spread was closer to 17 percent in 2001, and dipped to as low as 6 percent in early 2009. This decline is because of the increase in blending ethanol into gasoline, the agency said.

"As the percentage of ethanol in gasoline grows, higher octane blendstock becomes relatively cheaper, reducing the percentage-based grade differential for premium versus regular gasoline," the agency said.

Trade group American Petroleum Institute said higher blends of ethanol may cause engine problems.

For prices in general, EIA said the average price per gallon for regular unleaded is about 25 cents cheaper than the same time last year.