If you buy premium gasoline, you’ve probably noticed its price differential versus regular has been increasing in recent years. That is a sign of the rising value of octane, the primary yardstick of gasoline quality and price. In this blog series we’ve examined a new gasoline sulfur specification called Tier 3, which is causing complications for U.S. refiners looking to balance octane and gasoline production while still meeting the regulatory limits on sulfur. In today’s RBN blog, the fourth and final on this topic, we provide an analysis of the obscure Sulfur Credit Averaging, Banking and Trading (ABT) system, which allows refiners to buy credits to stay in compliance with the Tier 3 specs. The price of these credits quintupled in 2022, another sign of a tight octane market that will be attracting increased attention in the months and years ahead.
In Part 1 of this series, we detailed how the price of octane has marched steadily higher, driven by a market now impacted more by demand than production costs. Just as octane demand has been increasing, however, a number of factors have been tamping down octane supply and recently spurred a run-up in the retail “price” of octane, measured by the difference between the pump prices of premium and regular gasoline, which has gone from a 20-cent differential to about 80 cents per gallon over the past decade.
The Future of Fuels bi-annual report by RBN's Refined Fuels Analytics provides an in-depth analysis of the U.S. and global refinery industries, focusing on crude oil and fuel market dynamics, supply and demand, alternative fuels, refinery capacities, and price forecasts to help stakeholders navigate the evolving energy landscape.
In Part 2, we focused on a critical refinery stream called fluid catalytic cracker (FCC) gasoline. The Tier 3 sulfur specification requires that this refinery stream, which makes up 40% of U.S. gasoline supply, must be severely desulfurized to remove 99% of the sulfur it contains. That is necessary to meet the Tier 3 gasoline specification, which requires an average of not more than 10 parts per million (ppm) of sulfur in all finished gasoline sold in the U.S. That desulfurization step is where the connection between octane and sulfur enters the picture. The problem is that such severe desulfurization can reduce the octane quality of FCC gasoline, which can cause a major problem for those who must meet both sulfur and octane specifications when blending the finished gasoline.
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About the song
“Breaking the Chains” was written by Don Dokken and George Lynch and appears as the first song on side one of Dokken’s debut album of the same name. The song was originally released as a single in Europe in 1981 from the album on the French label Carrere Records. The song and album were entitled “Breakin’ the Chains” while on Carrere Records. After securing a deal with Elektra Records in the U.S. in 1983, the album and singles were released as “Breaking the Chains.” Released as a single on Elektra Records in November 1983, it went to #32 on the Billboard Mainstream Rock Singles chart. Personnel on the record were: Don Dokken (lead vocals, rhythm guitar), George Lynch (lead guitar, backing vocals), Juan Croucier (bass, backing vocals), and Mick Brown (drums).
The album, Breaking the Chains, was originally recorded in Cologne, Germany, at Dierks Studios, with Michael Wagener producing. The album was re-mixed, partially re-recorded, slightly re-named, and re- released by Elektra Records in November 1983. It went to #136 on the Billboard 200 Albums chart. Four singles were released from the LP.
Dokken is an American glam metal band formed in Los Angeles in 1978. They split up in 1989 and re-formed again in 1993. The classic lineup of the band consisted of Don Dokken (lead vocals, rhythm guitar), George Lynch (lead guitar), Jeff Pilson (bass), and Mick Brown (drums). Fourteen people have passed through the band since its inception. They have released 11 studio albums, six live albums, nine compilation albums, one EP, and 36 singles. Dokken has sold more than 10 million records worldwide. The band still tours, with Don Dokken being the only original member in the band.
