RBOB is an acronym for “Reformulated Gasoline Blendstock for Oxygenate Blending”. The new popularity of RBOB in the exchanges owes much of its success to state legislation banning gasoline with MTBE. This chemical was found in unleaded gasoline and posed a threat for people and wildlife because it polluted groundwater sources. As a result, RBOB, which does not contain MTBE, has quickly grown in popularity with futures traders, and it has also become the new benchmark gasoline contract.
RBOB Gasoline Contract Specifications
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RBOB Gasoline Facts
Gasoline is made up of hundreds of hydrocarbons that allow for its use as a fuel for mainly car engines and other internal-combustibles. Petroleum crude oil is the most popular and cheapest means of a fuel source because of a refinery’s ability to turn more than half of a crude oil barrel into gasoline. There are three steps in the refining process that include separation, conversion, and treatment. There is an additional process called hydro treating that eliminates sulfur from the gasoline product. Currently, hydro treating is only required in California.
Octane measures the ability of gasoline to withstand common “engine knock”. That is why gas stations have 3 grades of fuel including regular, mid-grade, and premium, with octane and price increasing with each grade. This does not necessarily mean that the fuel will burn any better for a car engine, but just at a slower rate, which helps decrease that knocking.
The passage of the Clean Air Act of 1990 ensured that ethanol would be added to the gasoline supply to reduce harmful emissions that are released into the air from engine exhausts.
Source: Barchart
Last updated September 2015.