Octane performance standard preferable to RFS, AFPM president says

Source: By Nick Snow, Oil & Gas Journal • Posted: Wednesday, April 18, 2018

The American Fuel & Petrochemical Manufacturers believes a transition from the federal Renewable Fuel Standard to a fuel-neutral, 95-RON octane performance standard could better address the needs of consumers and other stakeholders, AFPM Pres. Chet Thompson told a US House Energy and Commerce Committee subcommittee.

“A 95-RON octane performance standard, if done correctly—with a sunset of the RFS, a reasonable phase-in, and robust market competition—has the potential to benefit consumers and all stakeholders, compared to the status quo,” he said during the Environment Subcommittee’s Apr. 13 hearing.

Thompson added that while AFPM believes this option has the most potential, the trade association also recognizes that it would raise many challenges and require a significant investment for refiners.

“This is why it cannot be considered in addition to the RFS,” he explained. “We are, however, committed to better understanding and exploring all of these issues and welcome the opportunity to start the conversation with other stakeholders to move forward on this path.”

Subcommittee Chairman John M. Shimkus (R-Ill.) said in his opening statement that one takeaway from a Mar. 7 hearing on the future of fuels and vehicles was that while electric cars continue to make progress, internal combustion engines—and petroleum and agriculturally based liquid fuels to power them—will dominate the US market for another 3 decades or more.

“High octane fuels can improve fuel economy in engines optimized for them. For automakers, it is a relatively low-cost tool to increase miles per gallon. And because ethanol is the cheapest source of octane currently available, it also may be a pathway to use at least as much if not more ethanol than under the RFS,” Shimkus said.

Disruptions are under way

Dan Nicholson, vice-president of global propulsion at General Motors, who testified on the US Council for Automotive Research’s (USCAR) behalf, said many facets of the traditional automotive business are being disrupted. “The global automotive market is growing, and multiple technologies and solutions will be needed to match demand. Octane is one of those solutions,” he said in his written testimony.

USCAR research shows that 95-RON octane makes sense from the viewpoints of both refiners and fuel retailers, Nicholson said. “As you may know, this is the same RON level that Europe has used as its minimum for many years. Without this new fuel, we will continue to endure the impacts of fuel variation and forego related available fuel economy improvement opportunities,” he warned.

Congressional leadership will be critical in bringing about fundamental market changes, he said. “We need to work together to improve the fuel in the US market to take advantage of engine designs that are more efficient and provide significant large-scale fuel economy improvements and corresponding reductions in greenhouse gas emissions,” Nicholson said. “And we must do so in a way that makes sense for consumers, which means developing a favorable consumer model for fuel and coordinated retail introduction.”

R. Timothy Columbus, who testified as counsel to the National Association of Convenience Stores (NACS) and the Society of Independent Gasoline Marketers of America (SIGMA), said in his written testimony that a higher-octane measure generally correlates with a lower risk of knocking.

When the risk of premature ignition is lower, possible engine damage from the phenomenon is minimized, Columbus said. “This is why higher compression engines, which can improve both fuel efficiency and car performance, generally require higher octane fuels,” he said. “Moving to a 95-RON standard, while it will necessitate changes to labeling and consumer education, nonetheless brings certain benefits and efficiencies to the system.”

Two other witnesses—Growth Energy Chief Executive Emily Skor and Paul Jeschke, a corn farmer from Mazon, Ill., who testified on the Illinois Corn Growers Association’s behalf—called for increased levels of ethanol in US motor fuels. Ethanol blends of 25-30%, instead of the existing 10% limit, would have a 98-100 RON that would enable higher compression ratios in next-generation engines, Jeschke said in his written testimony.