Are Higher Octane Levels the Future of Fuel Economy… and Higher Gas Prices?

The NHTSA issues Corporate Average Fuel Economy (CAFE) standards to regulate how far vehicles must go per gallon of gas. And while these regulations have done wonders to cut pollution, automakers are having a hard time keeping up. Developing these new technologies is expensive, they say. And who really wants all these extra gears in their transmission? Plus, despite the PR, fanfare, and federal tax credits, EVs aren’t exactly sweeping the nation (special thanks to those of us who still like to drive stick).

The OEMs insist that in the battle for better MPGs, victory would come easier via higher octane levels of gasoline. It’s an idea that gets revisited often—and one that is gaining some ground. And as national gas prices remain high (despite recent drops) and OPEC still struggles to cover the loss of Iranian exports due to President Trump’s sanctions, we got to thinking: Could a bulk-refined high octane fuel really become the new standard?

Benefits of Higher Octane Levels

First things first: Why the push for higher octane levels? Back in April, GM’s VP of Global Propulsion Systems, Dan Nicholson, spoke to Congress on the automakers’ behalf, lobbying for a 95 RON octane gasoline to become the new standard. (That translates to about the 91-octane that can currently be found at American pumps. Check out our article on different types of fuel for a quick refresh on octane ratings.)

This move would not only place the U.S. on the same metric as many European nations, but Nicholson argues that it would give consumers about 3% better fuel economy.

This is not the first time OEMs have requested a regulation on octane levels, but it is perhaps the most vocal they’ve been. As stated, automakers are bleeding money in an effort to gain even a mere fraction of increased fuel economy, making that proposed 3% look mighty attractive.

Drawbacks Could Include Higher Gas Prices

While the theory sounds simple enough, enacting it large scale is no easy task. The idea has consistently met with resistance from the EPA, oil refineries, and consumers.

Phasing out current grades of gasoline is but one hurdle. There are several ways to achieve higher octane levels, but all of them require some serious restructuring by refiners. Restructuring means investments. And investments could mean costs passed to consumers in the form of higher gas prices.

Additionally, if Big Oil were to take the path of least resistance (And really, Why wouldn’t they?), ethanol will be used to raise octane levels. Yes, most of America’s gas already has some ethanol blended in. And indeed, that amount increases each year thanks to the Renewable Fuel Standard. But the majority of engines on the road today can’t handle higher ethanol-grade fuel.

Higher octane levels are most easily achieved by raising ethanol content. But that could affect many of the cars on the road today.

Furthermore, if more agricultural space becomes dedicated to growing corn for fuel, what does that mean for food prices? Or wildlife habitats?

All in the Name of Fuel Economy

Nicholson argues that the benefits outweigh the cost. “If it is done in the right framework, it could have a lot of value for customers at a low rate if we pick the right octane level,” he said. If done correctly, he urged, the savings in fuel economy would be more than the rise in gas prices.

Additionally, refineries would eventually save money by only having to produce one grade of gasoline. Ethanol producers would be happy to gain a bigger slice of the pie. The ag sector gets their cut too, as the call goes out for more corn. And the automakers, well, they wouldn’t have to struggle for every MPG, saving money in R&D and manufacturing. Savings they would presumably pass on to us consumers in the form of lower vehicle prices. (An apparent benefit of everyone playing together nicely.)

According to Forbes, “Nicholson and others are proposing an extensive revamp of the current Renewable Fuels Standard which mandates arbitrary annual volumes of ethanol use. They propose a performance-based fuel standard that requires 95 RON with flexibility to let the market determine the best way to reach that.”

Frankly put, they don’t really care how octane levels rise, just that they do.

Gaining Ground… and Questions

Despite the obstacles involved, it appears the rule makers are at least willing to hear the automakers out. This past August, the EPA and NHTSA proposed the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks. (Really rolls off the tongue, eh?)

The rule aims to amend certain existing CAFE and CO2 emissions standards set under the Obama administration. It also sets out to establish new ones for 2021-2026 models. The current suggested avenue is to simply keep the 2020 standards. As expected, that was met with harsh criticism from environmental and resource groups. But automakers aren’t exactly keen on it either—especially since 17 states filed a lawsuit against the EPA in response.

If automakers win the bid for higher octane levels, could it come in the form of increased ethanol content?

Therefore, the agencies are seeking public comment “on a range of alternatives discussed throughout [the] document.”

One such alternative, tucked within the rule’s 1,200 pages, is exploring the enactment of—you guessed it—higher octane levels. Specifically, a high octane ethanol blend. And while it’s true that ethanol serves as a cheap and non-toxic method for bumping up octane levels, reports have found that it actually reduces gas mileage. Simply put, the ethanol that replaces gasoline in a mixture contains 33% less energy. That means that you need to burn more ethanol-gas than gas-gas to get around town, negatively affecting your fuel economy.

“More Ethanol, Please”

It’s easy to dismiss this lobbying as wishful thinking, especially as electric and hydrogen fuel cell technology threaten to take over. But just this past October, a bipartisan group of twenty U.S. senators wrote a letter to the President, urging him not to go through with a regulatory action to allow year-round sales of a 15% ethanol-blended gasoline.

Concerned that it would worsen air quality and ruin many consumers’ vehicles, the senators encouraged President Trump to consider other options and “engage in a collaborative and transparent process” when it comes to reforming the Renewable Fuel Standard.

Shortly thereafter, however, President Trump announced at a rally in Council Bluffs, Iowa that the EPA would lift the summertime ban on E15. Trump’s proclamation that, “My administration is protecting ethanol,” both appeased corn farmers suffering from agricultural tariffs and satisfied hungry biofuel producers. It also came at time when Republican support could use a boost in a swing state with six electoral votes.

The move seemed to succeed in part, as incumbent Iowa governor, and passionate supporter of year-round E15 sales, Kim Reynolds was just re-elected, with just 50.4% of the vote.

Empowered Consumers?

Obviously, this policy change doesn’t implement the higher octane levels automakers are lobbying for. Although, it does feel like they can chalk this one up as a win. Whether or not increased ethanol is the answer, the current administration seems in favor of exploring the option. If for nothing else, than as a way to alleviate distress brought on by bothersome sanctions and tariffs.

And while the efforts to increase fuel economy are worthwhile—and certainly applaudable—it’s worth remembering that even Clean Air is a business. From the government, to the refineries, to the farmers, to the environmental groups…everyone has a stake.

And if the top dogs determine that a standardized high-octane, ethanol-blended fuel is profitable? Well, they’ll move mountains to make it happen, whether you want it or not.

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