Time for a re-post on an often-discussed topic - "cheap" gas, or as it used to be known in England - supermarket petrol. I don't use it, and neither should you. Yes, it's cheaper up-front, but there's a reason for that. It's also the reason that supermarket petrol in the UK is now not much different in price to regular petrol stations; they had to change their ways.
So why is the petrol or gas at places like Costco so much cheaper per gallon than everywhere else? It's not a simple answer - the base petrol stock is identical for every vendor, but it can be broken down into three basic parts, as follows:
1. Filtering. Tanker drivers can fill their tanks for petrol station deliveries at two different filling locations in most refineries. The difference between the regular and the premium fuel dumps is the filtering process. The premium fuel goes through additional filtering and purifying before being distributed. This may not sound like much, but the regular stuff puts the responsibility on the individual petrol stations to regularly clean out their underground tanks and change their pump filters. I think we all know how often that is likely to happen. That means there's a greater chance of sand, grid, rust and other crud getting into your tank from a cheap petrol station, meaning a greater likelihood of blocked fuel filters and/or fuel system damage.
2. Additive packs. Once the tanker is loaded with the regular petrol, the driver goes off on the delivery rounds. For premium loads, they make a second stop at the additive dump. This is where the extra detergents, fuel additives, stabilisers and other products are added. (Things like the Texaco / Chevron Techron). They're dumped into the tanker in liquid form and get mixed in to the fuel load simply by being in a moving tanker truck. Cheaper petrol stations don't have these additive packs and it's open to debate whether that's a good or a bad thing, but generally speaking, a decent detergent additive in your petrol is not a bad thing.
3. The biggie: separate trucks. The cheap brands use the same tankers for everything. One day it might have industrial diesel in it. The next day, commercial petrol, and the day after that, farm-grade diesel or worse - raw crude. Theoretically, the tanks ought to be cleaned out between each load, but in reality, the deadlines and costs are so tight that this just doesn't happen. So it's not only possible, but entirely normal that when you fill up with petrol from a cheap filling station, you're getting an impure blend of petrol, diesel, and in some cases, raw crude. The bigger name-brand filling stations and companies always use dedicated tankers for each product. Once a tank is allocated for petrol, that's all it carries. Same for diesel, same for crude.
In the UK, supermarket petrol exploded (pun intended) in the 90's and people flocked to it because it was so much cheaper. All of the above reasons were why, and after a particularly bad spate of problems of sludge in people's engines (caused by an impure mix of petrol and raw crude), they had to 'clean up' their act, so-to-speak. Now that most supermarkets in the UK have dedicated trucks and additive packs, their cost to the public is not that much different to mainstream stations. But this hasn't happened in the US yet, and supermarket petrol is only just starting to boom over here. The only question is for vendors like Costco - they sell petrol as a loss-leader to get people to their facilities, and it's unclear if they are using the cheap, unfiltered, 'dirty' truck petrol, or the mainstream products. I think it's different in different areas of the country / world, but in my local area, Sam's Club and Costco are both stocked from Shell-branded tankers, meaning it's the "good stuff" but sold at a loss (well not really as you have to pay a membership fee to fill up there).
