There’s a looming octane shortage and it could affect prices at the pump, experts warn. (Photo By: Getty Images/iStockphoto)
Try octane. There's a looming shortage of octane that experts say could affect everything from car engines to regulatory decisions to your pocketbook.
"We're not going to be using more fuel in the U.S. in the next five years, but we'll need more octane, at least until more cars run on electricity," said Tom Kloza, global head of energy analysis at Oil Price Information Service.
Kloza and other speakers at a recent Energy Information Administration forum said the split between regular gasoline and higher-performance blends with a higher octane rating has been increasing for years.
According to EIA, the difference topped 50 cents a gallon for the first time this year.
"From 2012 to the present, that dynamic has changed and may possibly change even more drastically soon," Kloza said.
While the United States has upped its production of crude oil, it's mostly light crude oil which requires expensive enhancements to up the octane rating.
Add in demands from agricultural and chemical interests, and you have the potential for a "battle royale" over octane, Kloza said.
There's another tricky situation afoot, Kloza added. Vehicle fuel efficiency standards tend to dampen overall fuel demand, but increase the need for octane.
"We'll need more octane for the U.S. gasoline pool if fossil fuel remains dominant," he said.
Max Pyziur of the Energy Policy Research Foundation noted that several states have threatened to sue the Environmental Protection Agency if it rolls back Corporate Average Fuel Economy (CAFE) standards for passenger vehicles and light-duty trucks.
"The original program was calibrated when crude oil prices were high and expected to stay that way. That hasn't happened," Pyziur said. "Refiners would prefer higher octane levels with more-efficient gasoline engines, even if producing that fuel would take more trouble than now."