Octane: What's in Your Fuel?

Minimum octane rating decisions could greatly impact ethanol’s future market opportunities
By Kris Bevill | June 12, 2012

At a time when ethanol’s high-octane rating is touted as its most valuable asset, a situation in South Dakota shows a lower-octane gasoline scenario could also emerge. In March, officials at South Dakota’s Office of Weights and Measures began receiving calls from members of the state’s petroleum industry, warning that cheaper 85 octane gasoline had been making its way from the higher elevations in the western part of the state, where it has been historically sold, and into areas where the minimum octane rating is 87. South Dakota, like other states, requires octane labeling, and there was concern that the subgrade 85 octane was being marketed as 87 octane to unsuspecting customers. David Pfahler, director of the weights and measures office, dispatched inspectors who quickly confirmed that some of the stations suspected of selling 85 octane were not labeling the fuel as such. Word of the inquiry spread quickly among the fuel suppliers, however, and within the first few hours of the inspection blitz, Pfahler says officials began encountering hastily applied 85 octane labels on pumps at stations where the fuel was being dispensed, a last-minute attempt to ward off potential fines. As a result, the state identified just 29 stations of mislabeling 85 octane fuel as 87 or even 89 octane. By mid-May, the situation remained under investigation and inspectors were continuing to conduct fuel label compliance checks, but charges had not yet been filed against any retailer or supplier. Fines for mislabeling fuel, however, are relatively small, punishable by up to 30 days in jail, a $500 fine, or both.

Why 85 Octane?
The use of 85 octane gasoline dates back to carbureted vehicles manufactured before 1984. Engine knock was known to occur in that type of engine due to a number of factors, with altitude being one of the most significant. The American Society for Testing and Materials identified regions, primarily in the Rocky Mountains, where lower octane gasoline performed as well in those engines as 87 octane at sea level, and to this day, 85 octane is sold in those regions, despite the fact that vehicles now use computer-controlled systems unaffected by high altitudes. Western South Dakota receives its gasoline from suppliers in neighboring mountain states, so 85 octane has served as the region’s regular unleaded gasoline for decades. The legality of the octane level was never made an issue, but the state’s regulations actually prohibit the sale of 85 octane fuel throughout the state. Suppliers were notified of the regulatory discrepancy after 85 octane use was discovered in eastern South Dakota this spring, but rather than comply, they told the state that 85 octane is the only gasoline provided by area suppliers, so if 87 octane is required, the western region of the state would face gas shortages.

Caught in a difficult situation, the state agreed to allow 85 octane gasoline to continue being sold, if properly labeled. Then, in a surprising move, the state said it would propose to legalize 85 octane throughout the entire state. As of May 17, an official rulemaking had not yet been proposed, but it was anticipated that the state would soon issue an emergency rule to legalize 85 octane temporarily statewide before moving forward with the traditional rulemaking process.

Lower Octane’s Impact on Ethanol
While perhaps not immediately recognizable, the South Dakota situation bears significant potential consequences for the ethanol industry. No vehicles are currently approved for use with fuel containing an octane level below 87, and because the 85 octane fuel being used in South Dakota is being blended with ethanol, there is concern that ethanol will take the blame for vehicle damage actually caused by lower octane gasoline. “We think people will have problems with it and when they do we’re reasonably certain, from what we’ve seen elsewhere in the country, that it’ll be blamed on ethanol,” says Ron Lamberty, senior vice president at the American Coalition for Ethanol, the Sioux Falls, S.D.-based ethanol industry group. Additionally, because lower octane gasoline can be produced more cheaply, if 85 octane is officially allowed into the eastern part of South Dakota, refiners in neighboring Minnesota may feel pressured to lower octane ratings, beginning a domino effect of refiners reducing octane rating. “Eventually you create a system where refiners have decided to do something that makes them more money and forced the government to accept it,” Lamberty says. “That can’t happen. That’s why there are standards in the first place.”

Perhaps most important in the long run is the potential for octane itself to decrease in value. Ethanol’s 113 octane rating makes it a desirable octane booster in gasoline-ethanol blends, but if low-octane fuels begin to become acceptable in the marketplace, despite automaker warnings and environmental concerns, ethanol’s high-octane rating won’t carry as much value. To be fair, refiners would probably continue blending ethanol to bring the lower octane base fuels up to whatever the newest minimum is, but a regulatory decision to lessen octane’s importance would be a blow to future market possibilities for high-octane fuels.

Ford On Board
Increasing fuel economy standards for vehicles will require auto manufacturers to design smaller, more efficient engines that continue to satisfy the consumer’s desire for power. Some automakers have already begun introducing these types of engines into the market, the most well-known being General Motors Co.’s Ecotec engine and Ford Motor Co.’s Ecoboost engine. High-octane fuels have been shown to be the most effective fuel for these types of engines, and some experts have suggested that higher octane gasoline could be beneficial in existing engines as well. Ford researchers noted in a March article in the scientific journal Fuel, that while more research is needed to quantify and optimize the costs and benefits, “substantial societal benefits” may be realized by capitalizing on ethanol’s high-octane rating.

In the paper, titled “High octane number ethanol-gasoline blends: Quantifying the potential benefits in the United States,” the Ford researchers, led by Jim Anderson, examine the critical role octane rating plays in the design, operation, efficiency and emissions of spark-ignited engines. The researchers state that higher minimum octane ratings would enable higher compression ratios in future vehicles, improving efficiency, and benefit all spark-ignited engines and hybrid vehicles. “Incorporating ethanol with its inherent high-octane rating is one opportunity to enable an increase in the minimum octane rating for regular-grade fuel,” they said.

Anderson and his colleagues point out that despite increasing blending of ethanol into the nation’s gasoline, the octane ratings of regular gasoline have remained unchanged for 40 years. The researchers attribute this lack of octane increase to petroleum companies modifying their base fuels to take full advantage of ethanol’s octane at a 10 percent blend. In the paper, Anderson’s group says that even if ethanol content is increased, the oil industry can be expected to continue to reduce the octane ratings of its blend stocks so that the final product meets minimum octane requirements, unless government policies raise the minimum octane rating. And, because automakers design the vast majority of their vehicles to operate on the minimum octane rating, the opportunity to increase vehicle efficiencies through the use of higher octane gasoline is limited. “If vehicle manufacturers knew with certainty that the minimum octane rating of fuel would increase at a known future date and remain at these levels, it would be possible to provide future engines that are designed with higher [compression ratios] and operate with correspondingly higher thermal efficiencies, which could also provide the potential for engine downsizing and turbocharging to further improve fuel economy,” the researchers said.

Interestingly, the researchers note that the “logical first step” towards improving the nation’s octane rating would be to eliminate the use of 85 octane fuel in high altitude regions and establish a nationwide minimum octane rating. “This relatively simple change would affect a very small fraction of fuel produced, but would have an immediate efficiency benefit for vehicles using such fuel in those areas of the country, and would allow more efficient future use of nearly all fuel used by the [light-duty vehicle] fleet in the U.S.,” the researchers wrote.

Anderson and other Ford researchers also contributed to a paper recently published by global automotive engineering association SAE International that details research funded by ICM Inc. and conducted by AVL Powertrain Engineering Inc. to examine several aspects of increased ethanol blends as related to vehicle fuel systems.

The paper, titled “Effect of Heat of Vaporization, Chemical Octane, and Sensitivity on Knock Limit for Ethanol-Gasoline Blends,” was co-authored by experts at AVL, Ford, BP Products North America Inc., Deere & Co., and Steve Vander Griend, head of research and development of ethanol engines at ICM. AVL researchers tested a number of ethanol blends during the study, ranging from E0 to E98, and found that when ethanol content is increased, the knock-limited performance and the thermal efficiency of engines significantly increases, particularly in turbocharged direct-injection engines. Vander Griend says the most exciting part of the study is that it demonstrates ethanol’s full value as a fuel. “There is value beyond E10 by simply adding ethanol,” he says. “When you give more octane via ethanol, you increase the range of efficiency.” Auto manufacturers still need to determine what their ideal octane rating will be before the ethanol industry can begin targeting a specific blending ratio, but based on current and previous research data, Vander Griend says he believes E30 could be “a great starting point” because it offers the increased cooling effect desired for fuel efficient engines and a research octane number, or RON, of about 100. The Ford researchers stop short of identifying an optimal ethanol blend in their paper, but note that large increases in octane could be possible by blending 10 to 20 percent more ethanol into the 10 percent ethanol blends currently on the market.

Not surprisingly, the petroleum industry has yet to express a willingness to increase the U.S. minimum octane level. “We feel the three levels of octane currently available serve the customer best,” says Bob Greco, downstream director for the American Petroleum Institute. He admits that refiners have adjusted their blend stocks to produce gasoline that meets minimum octane requirements when blended with ethanol. Ethanol’s high-octane rating is its most desirable property to blenders, he says, but he declined to discuss the financial benefits for refiners who take full advantage of ethanol’s high-octane by using lower-cost blend stocks, stating that the costs vary on a refinery-by-refinery basis.

According to Greco, consumers have the option of purchasing higher-octane fuels so there is no need to increase the minimum. But Anderson and his fellow researchers pointed out in their paper that as long as fuel with a high ethanol content and/or high octane number is classified as a premium grade gasoline, manufacturers will not optimize their vehicles to use the niche fuel. “Ideally, for a maximum societal benefit and to ensure a successful transition, the minimum octane ratings of all U.S. gasoline should be increased, rather than positioning the high ethanol content/high octane number fuel as a premium grade,” the researchers say in the paper.

ACE’s Lamberty also believes the future of the ethanol industry will focus greatly on its octane rating and the benefits of high-octane fuel. Ethanol is currently the cheapest, cleanest, highest-octane fuel available, and Lamberty says producers who were focused primarily on expanding and improving production just a few years ago will be paying more attention to increasing the value of their fuel now that the industry has matured. And if value is the focus, octane will be the subject of interest. “Anything we can do to maximize ethanol’s position as an octane product rather than just as an extending product is where we’ve got to move that product eventually,” he says. “Overall, the volume of gasoline or gasoline replacements being sold is not going to go up, so other than just making gallons, the next thing we have to establish as an industry is our value as octane.”

Author: Kris Bevill
Associate Editor, Ethanol Producer Magazine
(701) 540-6846
[email protected]