The Gasoline BOBs -
CBOB and RBOB
(and CARBOB)
Do you know the gasoline BOBs? No? Well, let me introduce you to the two of them (and their cousin).
Long ago, in the bad old days when our cars were big, fuel was cheap, and we actually put lead in the gasoline, there was conventional gasoline. Conventional gasoline was just that—gasoline. Gasoline contains a number of hydrocarbon compounds that are distilled, reformatted in a catalytic process, catalytically cracked, hydro-cracked, and acted on by a number of other processes that create a different blend of fuels, with different chemical contents and performance. The refinery blends each of these process streams into gasoline.
Cleaning up the air – When the Cure can Kill
The Clean Air Act of 1970 introduced a tidal wave of regulation to the automotive and oil industries (and many others). Under Title II of the act, the Environmental Protection Agency (EPA) operates to control the pollution created by moving sources, regulating emissions that anything with an internal combustion engine (including jet engines) produces.
Leading up to 1990, the wintertime pollution over a number of major metropolitan areas caused concern about the levels of sulfur and different unburned hydrocarbon compounds in automobile exhaust. The cold air allowed engines to run cooler, creating more unburned hydrocarbons. This, combined with the way cold air tends to trap warmer exhaust, created hazier and smoggier days.
The elimination of lead in gasoline and the introduction of catalytic converters in the mid-80s was only the first step in cleaning up the air. Other compounds, such as sulfur and benzene, still made it past the catalytic converter and into the air. To replace lead, and to reduce the amount of carbon monoxide and unburned fuel in exhaust gas, the EPA mandated the blending of oxygen-bearing compounds, MTBE (Methyl tert-butyl ether) and ETBE (Ethyl tert-butyl ether), into gasoline. Refiners have been adding MTBE to gasoline since 1979 to raise gasoline octane ratings and help prevent engine knocking. MTBE also displaces gasoline components such as aromatics— e.g., benzene and sulfur—optimizing the oxidation during combustion.
Let's talk a bit about MTBE. MTBE is an easy compound to make in the refinery. Methanol, derived from natural gas, and isobutylene from the butane obtained in the crude oil refining process, are reacted together to form MTBE. Refiners can add it directly into the blending stream as gasoline leaves the refinery. But MTBE, while not classified as a human carcinogen, is suspected to be a potential human carcinogen at high doses. MTBE gives water an unpleasant taste and can render large quantities of groundwater unfit for human consumption. The concern is that MTBE gets into the water supply from leaking underground storage tanks or from gasoline spilled onto the ground.
While the EPA did not ban the use of MTBE, individual states did. In the wake of a number of costly lawsuits, California and New York banned the use of MTBE in 2004. By the end of 2005, over half the states had passed legislation banning the use of MTBE. The EPA drafted plans in 2000 to phase out the use of MTBE by 2006.
Lawsuits continued, and oil companies asked for transition assistance in the form of $2 billion and liability protection while they phased out MTBE. That request did not survive congressional review, and the lack of MTBE liability protection quickly brought an end to its use.
Enter Stage Left – Ethanol
Many of us have ethanol sitting in a cabinet. That bottle of whiskey contains ethyl alcohol. One of the earliest biotechnologies employed by man, the fermentation of sugar into ethanol, has been with us since prehistory. The alcohol in wine, beer, and that fine single-malt scotch is the same ethanol that is blended into our gasoline.
Today, ethanol is used primarily as motor fuel and a fuel additive. The legal minimum level of ethanol in gasoline is 5.9%. In Brazil, ethanol makes up 25% of every gallon of fuel sold. Ethanol is also used as rocket fuel.
Mandated by the EPA, ethanol is the leading oxygenate added to gasoline in the United States. The feedstock for the US fuel ethanol industry is corn. The federal government supports the ethanol industry through subsidies given to farmers and manufacturers.
Ethanol, however, has a problem. It is highly soluble with water. This means that your single-malt scotch mixes well with club soda. This also means that fuel ethanol attracts water, making it corrosive to the steel used in pipelines and plumbing at oil refineries. If ethanol is pushed through a pipeline, the water that it attracts will corrode the inside of the pipes. If it's mixed with gasoline at the refinery, every pipe and tank that it passes through will be subjected to higher levels of corrosion.
Ethanol needs to be mixed into gasoline at the local terminal racks, just before it's delivered. The ethanol and gasoline are splash blended as the tanker truck fills before making the final trip to the gasoline station. From this point on in the supply chain, the corrosive nature of ethanol is not a concern. The tanks and piping systems of most gasoline stations today are constructed out of fiberglass and corrosion-resistant plastics. And, a protective layer of plastic lines the insides of gasoline delivery trucks.
At this point, the gasoline that comes out of the refinery is not a finished product. In the technical language of the industry, it is a blending component, or a blendstock.
Introducing the Gasoline BOBs
Reformulated Blendstock for Oxygenate Blending (RBOB) and his brother, Conventional Blendstock for Oxygenate Blending (CBOB) are the two base gasoline stocks that get mixed with ethanol at the terminal racks.
Two base stocks exist because of further EPA mandates. The map above illustrates a color-coded patchwork of different blends of reformulated gasoline, each one a specific cocktail for the climate. This map predates the complete phase-out of MTBE, but it still accurately depicts the wide variety of reformulation required at the local level. Each color-coded area represents a market that requires RBOB. The white areas indicate where CBOB rules.
Before I forget, there is the blending-stock cousin, CARBOB, a special RBOB formula mandated by the state of California.
RBOB is more expensive to refine—more energy and more effort are required to pull some of the additional hydrocarbons out of the fuel. Producing reformulated gasoline using ethanol presents problems for refiners. Ethanol affects nitrogen oxides (NOx) and toxic emissions as well as Volatile Organic Compounds (VOCs). For RFG (Reformulated Gasoline) to meet VOC requirements, the finished blend must have a low Reed Vapor Pressure (RVP), generally less than 7.0 psi during the summer.
Creating a base, unfinished, reformulated gasoline mixture for ethanol addition, the reformulated gasoline blendstock for oxygenate blending, or RBOB, must have an RVP reduced to very low levels of 6.0 psi or less. The refiner must remove light molecular weight, high RVP components, which changes the RFG’s distillation characteristics. This requires the removal of some heavy molecular weight and high boiling point components as well.
CARBOB is even more expensive, and is the main reason why California gasoline prices are typically higher than anywhere else in the country. More RVP must be removed from the blending stock. Since ethanol may increase the NOx, other additives and formulations are needed to meet higher air quality standards in California, which has a lower NOx limit.
What Does This Mean? Look at the Imports.
The chart above shows the weekly average import volume, in thousands of barrels, of RBOB (with special blending components for blending with ethanol) into the PADD 1—Northeast area. Each dot is a week. Do you notice that there are no imports prior to the middle of 2004? Well, that reflects the start of the New York ban on MTBE. Do you also notice the sharp increase in the middle of 2006? That is when the federal mandates kicked in.
You may notice that between 2004 and 2006 there are many weeks where the dot is on the zero line—meaning no imports. But once the federal mandates kicked in, and the new EPA RFG maps for the US came online, imports of RBOB grew.
The chart above shows a tighter timeframe of imports, starting from where the last chart stopped. If you look at both charts and imagine drawing a trend line, you will see that the trend for imported RBOB is dropping. Two reasons for this are: 1. demand dropped. 2. domestic refiners in the PADD 1 area upgraded their operations to make the RBOB.
Now let’s look at the import volume for the CBOB for the rest of PADD 1 that does not require the reformulation. The imports started at the same time as the ethanol mandates. The pattern is getting tighter and is on a slight trend down.
Still, if you consider both together, about 200,000 barrels of BOB are imported every day into the PADD 1 area.
I leave you with one question: WHY is so much imported? To answer that, you must consider that there is more than one answer. Demand is one. Perhaps price is the other. And we will look at those two moving parts in another article.
But while you are waiting, I leave you with a different kind of Bob...
Articles in This Series
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