To be sure, there is debate on what’s behind the octane shortfall. “This dynamic should continue in 2023 and may lead to a similar explosive upside in gasoline prices this summer." “Meeting lower sulfur requirements comes at the expense of octane levels, which likely contributed to soaring prices for high octane blending components," they said in a recent note. The true effects of the regulations started to become clear last year as gasoline consumption recovered, according to analysts at Bank of America Corp. In 2020 fuel demand dropped due to pandemic-related travel restrictions. The gasoline sulfur standard for the rules took effect in 2017. The process destroys octane, thus contributing to a shortage and helping to widen the value of premium gasoline to regular grade. Separately, US “Tier 3" environmental regulations, which require lower sulfur content in gasoline, have created complications.Ĭompliance with the rules requires more severe hydrotreating of naphtha and gasoline during refining. The loss of these Russian feedstocks is critical for gasoline markets this year, according to consultant Energy Aspects Ltd. Meanwhile, the European petrochemical industry has cut the supply of octane-boosting additives as high energy costs and weak demand curbed operations. The European Union and the UK last month banned most seaborne imports of Russian petroleum products, reducing the region’s supply of naphtha, a key component in making gasoline. However, the shortfall shouldn’t be problematic because there are more low-octane components available for making regular gasoline than high-octane fuel. Vehicle manufacturers often recommend high-octane gasoline - the premium grades at the pump - to get peak performance from turbo-charged or high-compression engines.Įven regular gasoline contains octane. A higher value means the fuel is more stable and less likely to cause an engine knock. Octane itself is a hydrocarbon, produced in the refining of crude oil, though consumers generally know about it through the so-called octane rating for gasoline.
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