November 27, 2020

How Will Fuel Changes Impact You?

The 89 octane fuel you buy today will become 87 octane by this fall, due to changes in federal regulations. Chad Besch, MaxYield Cooperative’s energy team leader, explains what this means and why you’ll likely see changes in fuel prices soon.

• Currently, most Iowa fuel stations use two grades of gas: Ngrade 87 octane gas (regular unleaded) and A-Grade, which is premium gasoline. Iowa law prevents the sale of any fuel lower than an 87 octane blend.

• To provide gasohol at the pump, fuel suppliers buy 90% N-grade fuel and 10% ethanol. By mid-September, however, the pipelines will quit shipping N-grade fuel. Already, there is no N-grade fuel available in places like Chicago. In place of N-grade, the pipelines will ship V-grade gas, which is 84.5 octane.

• MaxYield will have to blend this 84.5 octane gas with another product to get the fuel up to 87 octane. We’ll use 90% V-grade gas with 10% ethanol to get 87 octane.

• Ethanol works in an array of equipment, including small engines and tractors and does not affect engine performance. Ethanol blends have to meet lubricity specifications set by the American Society for Testing and Materials, Besch noted.

• MaxYield may still have a non-ethanol graded gas available that will be 87 octane. We’ll take V-grade gas and mix it with A-grade premium gas. It will take about 60% V-grade and 40% A-grade to supply a regular unleaded fuel with no ethanol.

• The challenge, however, is that A-grade is not very well supplied right now. There are two terminals in Milford, but one doesn’t have an A-grade tank, and there are no plans to install an A-grade tank. A-grade gasoline is easier to get from primary terminals in Des Moines and Clear Lake. “It’s a chicken and egg thing,” Besch said. “Will people buy more ethanol products, or will they want more of the A-grade fuel? I don’t know. If A-grade isn’t available at the terminals, however, we won’t have any non-ethanol unleaded available.”

• These changes, which will begin to take place in September, will have a price impact. “Right now, there’s about a 10-cent price difference between gasohol and unleaded,” Besch said. “This will likely jump 30 to 40 cents per gallon at today’s price spread.”

MaxYield’s energy team will do all that they can to prepare for this transition, Besch added. “The fact that the 89 octane you buy today will soon become 87 octane is not unique to MaxYield. These changes are occurring throughout the industry and are related to the federal Renewable Fuels Standard. We’re working to make this change as seamless as possible.”

If you have any questions related to this transition, or any other fuel- and energy-related questions, contact MaxYield’s Energy Central at 866-711-7282.

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