Octane refers to the combustion point (under pressure) at which detonation of the fuel occurs. In high compression engines, low octane fuel auto-ignites before the compression stroke is complete, meaning your piston is trying to compress a fuel-air charge that has already detonated - and is moving against the force of the premature 'explosion.' The result is called knocking (or pinging) and it's bad for the engine - the sound you here is the jolt delivered to your pistons, valves, rods, and bearings.

Turbocharged engines certainly fall into the category of high compression engines. But many naturally aspirated engines do, too, especially those with variable valve timing and advanced intake port geometry. These engines are more responsive and powerful with the proper fuel. If the octane is too low, the ECU picks up a signal from the knock sensor and compensates by reducing engine performance, sometimes dramatically.

Here's more than you ever wanted to know about octane: http://www.turborick.com/gsxr1127/gasoline.html
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David \\ (98 S70 T5SE Black, misc mods (mostly lighting), red calipers) (92 940GLE)