I have a 1996 850 and have always used premium gasoline. With the high price of premium I'm tempted to use regular unleaded. Any thoughts?

Thoughts?? Yes, you wastd a lot of money.
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Tom 69-1800S, 72-1800ES, 96-850T,2000-S70 GLT-SE

Like I said in a previous post about gas mileage:

Curious about this very same question, i started a spreadsheet with mileage & fuel usage. Overall (~40% highway / ~60% surface street) i get 26.752 mpg on 87 octane fuel and 26.274 mpg on premium (usually 93 octane, but at least 91 octane) in my n/a base 1995 850 with manual transmission. I found it very interesting that i get better economy from 87 octane than premium. May be due to the slight boost in performance with premium makes me mash the accelerator more. Also, fuel here in Chicago is 10% ethanol. We're a mere 500 feet above sea level, which helps.

With some quick math and assuming relatively current prices: 87 octane is $3/gallon and premium (again, usually 93 octane but at least 91) being $3.20/gallon, it would be:

mpg/cost per gallon = miles/dollar

87 octane: 26.752 mpg /3 $pg = 8.917 mp$
premium: 26.274 / 3.2 $pg = 8.211 mp$

or an 8% increase in actual miles per dollar by using 87 octane.

YMMV, obviously.

FYI, Volvo ONLY recomends premium with their TURBO engines, NOT NA. Like all other NA, non-high perf engines, anything besides regular fuel is a waste of money and as you've realized, causes even worse mileage.

My older turbo Volvo is slower with regular (timing retards), so far only tried one tank to date but with the recent gas prices, I'll try it again and check mileage to see if it'll worsen enough to justify the cost difference.

I've driven 15,000 miles in 8 months on regular unleaded. Engine is powerful and hasn't knocked or skipped a beat. I occasionally hit it to pass someone as I like to drive 80 mph on the highway. I can imagine it may have more power with higher octane, but I don't need it myself. This summer my mileage is consistently 23.4mpg, but I do 60% driving at 80mph, 25% stop and go city driving and only 15% on country roads at 50mph. Don '95 854T

You won't hear an audible knock but your knock sensors will pick it up and retard the timing as needed thus making the car slower than it should be. You're not alone, many turbo owners don't know that they should be using premium. I normally always use premium in my turbo Volvo but with the latest price hike, I've tried regular and can notice a slight power loss. I have yet to compare mileage differences to see if it's worthwhile or not.

What kind of equipment do you have that will calculate your MPG down to "0.001"?? Really!
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Tom 69-1800S, 72-1800ES, 96-850T,2000-S70 GLT-SE

Simple, the fuel pumps in the US read down to 0.001 gallons. I know that since my trip odometer only reads to 0.1 miles i should have truncated/rounded to appropriate signifigant digits. i feel comfortable inferring a 0.05 mile division and kept the extra insignifigant digits purely for shits and grins.

95 850, bought at 132000km, just hit 632000km, 500000km in a week less than 6 years. i cant believe how great this car is driving. anyway, ive used nothing but regular the whole time other than a few tanks of supreme early on for testing purposes. here in kanada the difference in price between reg. and supreme is much, much greater than in the u.s. what a rip.

Use 87 octane or better. Where I live, 87 is mid grade.

The Volvo ECU is built to retard timing if cheaper octane of less gas is used. You're gas mileage will drop off some and your car will be slower but no harm. Experiment with the dollar to mpg ratio with mid-grade and regular as well as premium and see what the REAL differences are.
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1998 S70 T5 Emarald Green Metallic, 2004 V70 2.5T Ruby Red, Previous Owner of Black '94 850 Turbo Wagon