Refinery Mixology: What’s in Your Gasoline?

Fun fact of the day: refiners, generally speaking, don’t make gasoline.

Drivers may think that crude oil goes into a refinery and gasoline comes out.

That’s only partially correct. Think of making gasoline as making a cake. There’s flour, eggs, milk, and oil in a cake recipe. Gasoline is similar in that it has multiple components that make up the gasoline recipe. At the end of that recipe you have two types of almost finished gasoline called Conventional Blendstock for Oxygenate Blending and Reformulated Blendstock for Oxygenate Blending.

To these blendstocks other liquids are added to make the substances that fuel our carpools, take us to grocery stores and get our families to their summer vacations. And, mostly, that final mixology does not happen at the refinery level.

The Mixers: CBOB and RBOB

To reiterate, most of the gasoline produced by refineries is actually unfinished gasoline or gasoline blendstock.

Blendstocks are blended with other liquids, such as ethanol, to make finished gasoline.

Most of the finished gasoline in the US contains 10% ethanol.

The blendstocks are a mix of components such as butane, reformate and FCC gasoline, which can be combined in different ways to reach needed specifications.

Conventional Blendstock for Oxygenate Blending (CBOB) is a blendstock that’s combined with ethanol to get E10 gasoline.

Reformulated Blendstock for Oxygenate Blending (RBOB) becomes reformulated gasoline (or RFG) after blending with ethanol.

What’s the Difference Between RBOB and CBOB?

Reformulated gasoline is required in certain areas to reduce smog per Clean Air Act amendments. RFG is required in cities with high smog levels and is optional elsewhere. RFG is currently used in 17 states and the District of Columbia. About 25 percent of gasoline sold in the US is reformulated.

Many of the RFG areas are in the mid-Atlantic and Northeast. So, OPIS spot market editors see a lot more Reformulated Blendstock for Oxygenate Blending (RBOB) trading in the New York Harbor region.

In the Gulf Coast spot market, Conventional Blendstock for Oxygenate Blending (CBOB) tends to be the most liquid product because there are fewer areas requiring RFG in that region.

Where Does Ethanol Enter the Picture?

Ethanol is like the icing on that cake made from gasoline. (Eww. Please don’t eat it.)

The use of ethanol is largely linked to the advent of the Renewable Fuel Standard (RFS) program, which Congress enacted to reduce greenhouse gas emissions, expand the US renewable fuels sector, and diminish US reliance on imports.

Ethanol isn’t blended into gasoline blendstock at the refineries, largely because ethanol can’t be transported through pipelines. It would damage them. Strong stuff!

Instead, ethanol is most often blended in at the rack, closer to its ultimate destination. That’s why you’ll often see ethanol listed along with gasoline and diesel in rack prices.

Ethanol serves to boost octane levels in gasoline, which can be helpful. But it also raises Reid Vapor Pressure (RVP), which can be tricky.

RVP measures the volatility in gasoline and is subject to seasonal mandates. So, blending ethanol can be complicated during summer months, when people are looking for lower-RVP gasoline.

Sometimes, detergents or other additives are blended into gasoline before it hits retail stations—those additives are a way that fuel brands differentiate themselves with customers.

Happy baking!

Tags: Gas & Diesel, Rack Market, Spot Market