Engine Design Trends Key Driver in Demand Uptick for High-Octane Fuel: EIA
Comparatively lower gasoline prices over the past year or so have been widely attributed to heightened consumer demand for premium-grade fuel, but increasing fuel economy standards have forced engine design modernizations that have likely been far more influential, the U.S. Energy Information Administration (EIA) said late this week.
In a report focused on premium gasoline sales, the EIA noted that the share of high-octane fuel in total motor gasoline sales has steadily increased since 2013, reaching 11.3% in August and September 2015. The share of premium gasoline sold bottomed at 7.8% in June 2008 but has now rebounded to the highest portion of total sales since September 2004, according to the EIA.
However, instead of drawing attention to the effects of the low-price environment in pushing consumers towards high-octane fuel, the agency instead pointed to changes in fuel requirements for light-duty vehicles (LDV).
Under the latest Corporate Average Fuel Economy (CAFE) regulations finalized in October 2012, automakers for model years 2017-2021 are required to ensure LDV meet a fleetwide fuel economy of 40.3-41 miles per gallon (mpg), with standards for model years 2022-2025 increasing to 48.7-49.7 mpg. The EIA noted that automakers have turned to several technical improvements in improving engine efficiency, but one process was singled out: turbocharging.
For those who have seen any installment in the “Mad Max” film series, turbocharging mechanisms — and their cousins, superchargers — should appear familiar, as they regularly appear protruding from the hood of the vehicle driven by the titular protagonist. From a technical perspective, the function of a turbocharger is simple — to increase engine efficiency by forcing extra air into the combustion chamber.
Turbochargers work by using a turbine driven off of exhaust gas to pressurize intake air, allowing the engine to produce more power. However, the addition of more air into the combustion chamber increases cylinder pressure and increases the risk of engine knock, the premature and incomplete combustion of fuel. Knock can damage the engine, so turbocharged engines require the use of high-octane gasoline, which has the greatest resistance to spontaneous combustion.
Over the last decade or so, the share of turbocharged vehicles in new gasoline- fueled LDV sales has increased rapidly alongside the move toward higher fuel economy standards. In model year 2009, turbocharged vehicles accounted for 3.3% of new LDV sales, but by model year 2014 that share was nearly five times that at 17.6% of the market, according the EIA.
Moving forward, that trend is expected to continue, and by 2025 turbocharged engines are expected to make up a huge 83.3% of the LDV market, the EIA said.
Of course, not all of those engines require the use of premium-grade gasoline, but as the production of vehicles with turbocharged engines grows, it is likely that manufacturers will increasingly either recommend or require the use of high-octane fuel, according to the EIA.
From model year 2010 to 2013, the percentage of higher-octane gasoline-fueled LDVs increased from 12.5% to 14.2% of the total market, an uptrend the EIA sees as inevitable given the move toward more stringent fuel standards and production shifts towards turbocharged engines.
In terms of prices, even an incremental increase in demand for premium-grade gasoline could prove meaningful, especially during seasonal RVP shifts when regional markets become increasingly reliant upon high-quality blending components like reformate and alkylate. Typically, transitions to low-RVP and VOC-controlled specifications in March and April spur some considerable leaps in premium gasoline prices, which in many cases are made more extreme by production constraints during times of heavier regional refinery maintenance.
At present, such influences are the primary motivators in the Group 3 spot market, where spot prices for premium gasoline have rocketed over 15cts higher in just the last two sessions. Midwest trade sources recently attributed the moves to a growing scarcity of high-octane gasoline components amid spring maintenance work involving a considerable share of overall Midwest catalytic reforming capacity.
In a report focused on spring refinery maintenance, the EIA last week drew attention to planned PADD2 catalytic reformer outages that in April were expected to be near 10-year maximums in terms of overall capacity affected.
–Corey J. Walker, email@example.com