The Octane Value of Ethanol Part 2 – Ethanol is an Outstanding Octane Additive
Most U.S. gasoline contains 10% ethanol. Among other things, ethanol is an outstanding octane booster. When considering the economic value of ethanol in gasoline, it is critical to properly account for its octane value.
See other blogs in this series The Octane Value of Ethanol:
- Part 1 – Measuring Octane Quantity With The Octane-gallon
- Part 2 – Ethanol Is An Outstanding Octane Additive
The term “aromatics” is used to describe a petroleum-derived hydrocarbon stream consisting of toluene and/or mixed xylene isomers. This aromatics stream is a traded commodity that is used widely as an octane additive. It is called aromatics because toluene and xylenes are classified in the chemical category called aromatics.
Here we compare the relative costs of aromatics and ethanol as octane-boosting gasoline additives.
Figure 1 shows the wholesale price history for aromatics (red) and ethanol (blue) at the U.S. gulf coast since 2007:
It shows that, except in rare circumstances, aromatics are priced substantially above the price of ethanol.
To properly compare the economic value of octane additives, we must also factor in how much octane is delivered to a gasoline blend when a gallon of the additive is blended in. This octane quality is called the blending octane value of the additive. In my recent report on ethanol octane economics, published by Renewable Fuels Association (RFA), I explained why the octane-gallon is the proper unit of measure for the quantity of octane, and why the cost of octane for different octane additives can be properly compared by comparing the ratio of an octane additive’s price per gallon to its octane blending value.
To analyze the economics of ethanol/refinery gasoline substitution, it is necessary to define the quantity of octane in units of octane-gallons, and the cost of octane in units of $/octane-gallon (octane is denoted AKI in this report which stands for Anti-Knock Index which is the octane measure used in U.S. commerce). One AKI-gallon is the quantity of octane that will raise the octane of one gallon of gasoline by one AKI.
Excerpt from Hoekstra Research Report for RFA – The Octane Value of Ethanol, June 24, 2025
Using best-available industry data, the RFA report also derived the octane blending value of ethanol to be 124 AKI-gallon/gallon (notice this is a quantity of octane, in AKI-gallon, divided by the volume of additive in gallons and, as a quantity per unit volume, it is analogous to a concentration of octane in the additive).
Best available industry data indicates the octane of the aromatics additive to be 111 AKI-gallon/gallon. The cost of octane, in cents per octane gallon, is then measured by dividing the price of each additive by its blending octane value, giving Figure 2:
In Figure 2, the data series look the same as Figure 1, except they are separated more in Figure 2 than in Figure 1. That’s because the lower ethanol price is being divided by a larger number than the upper aromatics price, giving ethanol credit for its higher blending octane value, (or its higher “concentration of octane”). The ethanol octane cost of 1.4 cents/octane-gal shown by the highlighted blue data label, is the value reported in the RFA report, and is less than half that of aromatics.
The conclusion from this comparison is that addition of ethanol is a much more cost-effective way to add incremental octane to gasoline than is addition of aromatics. In fact, ethanol, with its low price and outstanding octane value, is an outstanding octane additive.
ethanol, with its low price and outstanding octane value, is an outstanding octane additive.
Ethanol’s attribute as an outstanding octane additive is not the only consideration in ethanol economics. For a complete economic analysis, we must also factor in the differences in energy content of gasoline components (which affects fuel economy) and their tendency to evaporate (which affects smog formation). In our full economic analysis, these factors are also accounted for.
But it is best to consider these factors one-by-one instead of jumbling them all together into a confused tangle. The point of this post is to demonstrate and quantify the fact that ethanol is far superior as an octane additive than the aromatics stream that is commonly being used today for that purpose. And with octane-gallon supply being a primary factor affecting U.S. gasoline supply and increasing gasoline price today, this fact provides a strong economic incentive to further increase the ethanol content of gasoline.
ethanol is far superior as an octane additive than the aromatics stream that is commonly being used today for that purpose. And with octane-gallon supply being a primary factor affecting U.S. gasoline supply and increasing gasoline price today, this fact provides a strong economic incentive to further increase the ethanol content of gasoline.
I want to acknowledge the valuable input of Scott Irwin, Darrel Good, and their team in directing me to their work comparing the octane value of ethanol and aromatics, as represented in this FarmDoc Daily article.
In coming weeks, I will post more on the results and implications of the RFA report on LinkedIn. Meanwhile, I welcome input and especially critical reviews of the contents of the report via comments on the LinkedIn posts.
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George Hoekstra
George.hoekstra@hoekstratrading.com
+1 630 330-8159
