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Originally Posted by djuosnteisn
.... But in my mind, the cooling effects of water would increase the effective octane, right? Less chance for knock = higher octane?
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sort of - if you think of 'octane' as the fuel's reluctance to self-ignite. Just like race fuel, it allows you to run higher comp ratios and/or higher boost pressures without detonation.
Beware that such generalisations and statements are full of holes though, assuming other factors such as ignition advance etc are all equal (which they never are!)