When I started driving, the choice at the petrol station was straight forward. Leaded or unleaded. But now, you can choose from at least three kinds of unleaded fuel, diesel or LPG.

If your vehicle is diesel or LPG your choice is pretty clear and you’ll have to pay whatever the rate is at the service station you choose. But if you’re like the majority of Australian drivers, you will probably want to know the difference between premium unleaded and the cheapest unleaded available.

Various petrol companies have spent a lot of time and money to develop branding around their various fuels in an effort to differentiate a product which has relative parity across the market. Broadly speaking, there are three or four kinds of unleaded available in the large service stations around the country and they are differentiated by their octane rating and whether or not they contain ethanol.You might compare the difference between premium fuel and the cheapest fuel to the difference between whole-grain, artisan sourdough compared with a loaf of white supermarket bread. One is definitely more nutritious and considerably more expensive, but the other won’t harm you, in and of itself.

High octane, higher price

The higher the octane number, the more compression the fuel can withstand before igniting. In simple terms, this means that if the octane number is higher, more energy can be derived from that fuel.

As cars developed over time, so too did the fuel. Initially very crude petrol was used and this caused a phenomenon called engine knock, where the ignition of the fuel happened in the wrong part of the engine, with the potential to cause damage.

In the 1930s a measurement system was developed to quantify the grade of the fuel – the Research Octane Number (RON) was released by the Co-operative Fuel Research Committee based on work done by Graham Edgar.The various fuel retailers market their petrol with a brand name followed by a number (the RON) and 98 octane is the highest currently available in Australia, followed by 95 and 91 and finally E10 which is a mix of 10% ethanol and petrol.

Part of the marketing around the various premium fuels available promote them on the basis of their ability to be more efficient than lower octane fuels, as well as “cleaning” your engine because of the detergents the manufacturers include.

What is important to remember though is what your car’s manufacturer recommends you use. There will be little to gain from putting 98 octane fuel in a car that is rated to operate optimally on 91 octane unleaded.

Possibly the simplest way to save money on petrol is to shop around. You might be beholden to the vagaries of the global oil supply and the impact that has on fuel prices, but the wonderful thing about “the internet of things” means there are apps, like the NRMA’s, which will tell you how much the price is in your local area so you can shop around for the best price.

Extracted from Yahoo Finance