The Truth about Gasoline

I learned these things from my time representing oil companies (I did for a couple of years, ashamed I am to say). It was interesting to learn about gasoline patents and the chemistry and sales issues. All of this is public information, at least insofar as it is not protected by any attorney-client privilege.

1. Gasoline is stored in big tanks near refineries. You can see them everywhere, shaped like macaroons or hamburgers. They are wide, cylindrical, and usually about twice as wide as tall. Now, how do you get gasoline out of them? You can't just scoop it out of the top, because the top is actually floating. Why floating? If it didn't float, there would be a gap between gas and top of tank that would be filled with flammable vapors. Gas is taken out of a tap in the bottom. Well, not quite the bottom, obviously. Near the bottom, like the tap on a nice cooler chest. About 5-10 feet of gasoline are in the bottom and never really emptied until it comes time to clean the tank and you have to suck it all out. Let's just say it's not the cream of the crop at this point. I understand that is what ARCO buys (cheap) and it sells that dirty crap to customers (mixing it with other stuff). So that's why ARCO is cheap (in CA at least) and why it's a bad idea for your car to buy it (p.s. bar watchdogs: this is not confidential attorney-client information, but overheard at a big dinner from Chevron execs who were trashing their ARCO colleagues -whom they despised- a few seats down).

2. I also learned that premium gasoline is a byproduct of producing regular gasoline, which would otherwise have to be thrown out. Here in CA, they have 87, 89, and 91 or 92 octane gas. They market each "grade" always about 10cents higher than the one below. They all do this together, and there is no competition - the prices of different grades move together, not independently based on demand. The prices always move together. It does not cost more to make the higher octane - it is a necessary by product. When you "crack" the fuel it is exactly like distilling whisky. In whisky, the master distiller discards the first 10% of the distillate and the last 10%, known as the "feints" which are not desired because they consist of compounds that boil at lower and higher temperatures, respectively, than the desired main run. In other words, as you heat it up, the first stuff to boil is crap and the last stuff is crap.

3. No cars need more than 87 octane. It's especially funny that people with big expensive luxury cars think they need "better" gasoline. That's all a sales gimmick. I was told that only the worst OLDER engines "need" higher fuel. The top of the line luxury cars can do fine on 85 or worse. Better engines can do more with less, which makes sense. The problem is that oil companies have to sell this byproduct or dump it. Higher octane gas isn't cleaner burning, by the way - in fact, the lower octane gas is specially formulated to release less of the "greenhouse" gases. The remainder of the distillate becomes plastic or is tossed.

4. Oil runs the gamut from light sweet crude (Alaska) to thick heavy stuff. These different varieties crack (distill) at different temperatures in different amounts. So, for example, the T50 of light sweet crude (the temperature at which 50% of it boils) is different than the T50 of heavy crude. Refineries are fine tuned to take shipments of certain types of oil from certain places. Oil is not, in fact, fungible. Drilling ANWR would help California a lot, but not so much the East Coast refineries that depend on other sources of heavier stuff.

5. It turns out that the right "cut" of the oil with a very specific T50 and T90 (the temps at which 50% and 90% boil or "vaporize") burns very cleanly very very low emissions. This is what we burn in CA as "reformulated" gasoline, and it is 90% responsible for the decrease in smog in our cities. This also means we have a unique supply problem, with only about 5 or 6 refineries for the whole state. Pipelines do not cross the Rockies. These sorts of special state standards are what Bush calls "boutique fuels" and oil companies don't like them. They have to spend more to make them. The sales price of oil does not require oil companies to sell gas more cheaply (they sell that oil, they don't buy it), but refining costs do matter.

6. If you can find racing fuel in your neighborhood, give it a try. Racing fuel is not a byproduct of the petroleum cracking, but is special. Instead of being a hodgepodge of hundreds of hydrocarbons produced in the big distillation jamboree, it is specially formulated of 3 or 4 compounds tops. It gets 104 octane, and your car will sing. The difference between 87 and 92 octane is like the difference between 2-buck-chuck and Kendall Jackson box wine (take your pick which is which). Racing fuel is a '45 Bordeaux. It costs about $6-$8/gallon where sold (there are 4 stations in LA which do). It's starting to seem not so bad.

7. In most places, there ain't no difference between gasolines sold at Mobil, Texaco, Exxon, or other gas stations across the street. They transmit them in shared pipelines around the country. Each company puts X gallons in the pipe, and withdraws X amount at the other end. It's all mixed up on the way. Chevron puts in the Techron stuff at the end before putting it in the tanker trucks. ARCO, as mentioned before, does its own supply system differently.

Hope this was interesting.