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October 5, 2016

Is Premium Gasoline Really Worth It for Your Car?

Today I want to address an energy issue relevant to many motorists. According to a recent report by AAA, U.S. drivers wasted more than $2.1 billion dollars in the last year by using premium-grade gasoline in vehicles designed to run on regular fuel. Since some readers likely contributed to this windfall for refiners and fuel distributors, let’s consider the nature and function of premium gasoline.
One of my former jobs was as a gasoline blender for ConocoPhillips (NYSE: COP). In that role I became very familiar with gasoline standards.
There are two important requirements that gasoline must meet. One is that its vapor pressure has to be below a certain level, which varies with the seasons. Winter gasoline blends are allowed to have a higher vapor pressure (i.e., they boil at lower temperatures), because wintertime temperatures are cooler in the Northern hemisphere and the gasoline is less likely to evaporate.  
The second requirement is the familiar octane rating, and it doesn’t vary with the seasons. In layman’s terms, the octane rating is a measure of the fuel’s tendency to ignite too early, which can cause engine knock. To measure the octane rating, the fuel is compared to a standard chemical compound called iso-octane, which is assigned an octane rating of 100. If your fuel is below that level (as nearly all fuel is), then it has a higher propensity to knock than octane. The lower the octane rating, the more likely it is to knock.
Octane standards vary from one location to another, but “regular” gasoline usually has an octane rating of 85 or 87. “Premium” gas usually has an octane rating of 91 or 93, and can cost 20 cents per gallon more than regular.
While there can be subtle differences among gasoline brands (e.g., Shell and ExxonMobil may use different additives), the octane rating is the only meaningful distinction. However — and this is important — the octane number says absolutely nothing about the quality or the energy content of the fuel.
Premium gasoline is called for in engines that have higher compression ratios. This simply means that the air/fuel mixture can undergo a higher degree of compression, which leads to higher efficiency. If you use a lower octane fuel in an engine with a higher compression ratio, it can knock.
If, on the other hand, you use premium fuel in a less efficient engine, you are most likely just wasting your money. Many people have the impression that “premium” fuel is better for their engine. It is not, unless the engine requires it. Or they believe that premium fuel has a higher energy content. Actually, it may have less.
For example, there are several ways to boost octane, but a common one is to add ethanol to the blend. Ethanol has an octane rating above 100, but it also has significantly less energy content than regular gasoline. While gasoline may have an energy content of around 115,000 British thermal units (Btu) per gallon, ethanol only contains about 76,000 Btu/gal. In this case, as more ethanol is blended in, the octane rating rises but the energy content drops.
So keep that example in mind if you reach for the premium pump and think that you are doing your car a favor. You may be just pumping gasoline that contains a bit more ethanol, degrading your fuel economy unless you have a high performance engine.
The best course is to buy premium fuel only if your owner’s manual calls for it. If you aren’t sure, and your engine knocks, then it may be worth trying a tankful of high-octane premium to see if that corrects the problem. But if neither of these conditions applies you would likely be wasting your money.
If you still aren’t convinced, you can always test a few tanks of premium to see if your fuel economy improves. However, be sure not to conduct a test with different seasonal blends. 
Filling stations shift to summer blends around May, and then back to winter blends starting in September. Winter blends tend to have lower energy content, so take that into consideration.
Courtesy of Robert Rapier, Investing Daily (More from Investing Daily Here)
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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