Some U.S. refiners report lower-than-market gasoline profit margins in the summer, which are often attributed to summer volatility specifications. But that is not always the primary issue; rather, some refiners have trouble generating enough octane-barrels due to the strong demand during the summer months, which can help drive price spikes. In today’s RBN blog we explain why, with a focus on octane, the primary yardstick of gasoline performance, quality and price, and show how refiners use a PIANO analysis to optimize their production.
Octane is a measure of a gasoline’s resistance to pre-ignition during compression in an engine cylinder, which can cause a knocking sound. Retail gasoline is classified by its octane rating: regular gasoline has an octane rating of 87 and premium gasoline has an octane rating of 91 to 93 — typically, retailers also offer a blended, mid-level alternative with an octane rating of 89. In the U.S., the posted octane rating is the average of the octane measured two different ways, the Research Octane Number (RON) and the Motor Octane Number (MON). That average is called the Anti-Knock Index (AKI), which is the octane number we see posted on the pump, as shown below.
Gasoline at the Pump is Typically Available at a Variety of Octane Levels.
More than a technical indicator of knocking tendency, octane is the dominant market measure of retail gasoline performance and quality. And, as most drivers know, it is also the primary marker of gasoline price — higher octane means a higher price per gallon. Gasoline octane can be increased by either refining crude oil into higher-octane gasoline (through processes like reforming or using special catalysts) or adding octane-enhancing additives (such as alkylate) to refinery-produced gasoline.
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