Throughout the 1980s, retail margins on unleaded regular gasoline exceeded margins
on leaded regular gasoline. In 1987, for instance, wholesale prices of the fuels were nearly
equal, but the retail price of unleaded gas averaged five cents greater than the retail price
of leaded gasoline. The average difference in margins on self-service sales expanded from
about one cent in 1980 to nearly six cents in 1986, and then declined back to about two
cents by the end of the decade.' In some areas, the relationship has even reversed now, with
the margin on leaded gasoline exceeding the margin on unleaded gasoline. In this article I
analyze a number of possible explanations for the differences in retail margins between
leaded and unleaded gasoline and for the changes in these differences over time