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Old 09-22-2003, 09:03 AM
earossi earossi is offline
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Join Date: Mar 2002
Location: Naperville, Illinois
Posts: 92

Albert got most of it correct. I was trying to give the 50,000 foot view of gasoline, but there are a few things that still need to be clarified.

First, not all gasoline is transported via pipeline. Though it is safe to say that most of the gasoline goes via pipeline, a sizeable volume of product is moved via water. In fact, upwards of 25% of the total fuels volume is imported from mideast refineries.

Reacting to a "perceived" developing market in the mideast, most of the oil majors built refineries in places like Singapore and Saudi Arabia. To date, the market has not developed, so the finished product is shipped to America. Contrary to popular beliefs, gasoline is a commodity and, as such, behaves almost exactly as the classical supply/demand relationship taught in Economics 101.

Without getting on my soapbox for too long.......let me just say that anytime there is a spike in pricing, either universally or geographically, there is a hue and cry from the public that the oil companies have conspired to drive pricing up. This is usally followed with the formation of an investigatory committee to determine the cause of the pricing change. Since I am in the industry that undergoes these investigations, I can say with some certainty, that 99% of the outcomes from such investigations are that the pricing followed the classical supply and demand curves. End if soapbox, though I would be glad to provide more data if someone wishes.

The comments about product terminals was also partially accurate. Though all the major oils operate their own terminals, the capital cost of owning and maintaining a terminal in every market is prohibitive. To deal with this, gasoline suppliers negotiate "terminal agreements" with the various owners of terminals. As I originally stated in my first post, all gasoline is manufactured to the same national standards (ASTM) which allows you to co-mingle Exxon, Chevron, Texaco, etc in the same tank. The difference is the additive package. Simply put, if two companies share the same terminal tankage, they will each own and maintain their proprietary additization equipment at that terminal. So, when a Chevron driver fills his tanker, he tops it off with Chevron's additive from a Chevron owned tank maintained at that terminal. Since very little additive is actually added to any tanker batch, the additive is usually supplied, maintained, and discharged from 55 gallon drums. If a particular terminal moves a high volume, then the drums could be replaced with a small tank.

The last item I would like to comment on is the one with regards to octane. First off, octane DOES make a difference, if your engine is set up for it. Specifically, for any high compression engine, whether it be a new Mercedes, or an old American muscle car, more power can be produced with higher octane fuels. This statement becomes a little gray if your car is equipped with knock sensors, as are most of our Mercedes.

The optimum place to run any gasoline engine is right on the verge of knocking. That corresponds to the most thermally efficient place to operate; however, too much knocking leads to engine damage, while moving too much to the other side results in lost power and poorer economy. The knock sensors can determine the point at which the engine is just beginning to knock. The signal from the sensor is used in our modern engines to advance or retard engine timing to just keep you operating on the verge of knock, which is where you get the most power for the buck. Knock characteristics are affected by octane.

In reality, in most of our cars, you can drop a few octane numbers without being able to "perceive" a drop in performance since the ECU controls the spark advance. I DO run 89 octane, midgrade gasoline in my E320 and cannot tell the difference from 92 octane, because of the knock sensor control. Without the knock sensors, my engine would knock badly on the lower octane fuel.

Lastly, the octane specification is NOT controlled by ASTM standards; so, there can be legal issues around misrepresentation of actual octane. I can tell you, emphatically, that the major oils control octane to prevent such publicity.

Sorry, again, for the long post.
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