The octane rating of a fuel simply measures the resistance that fuel has to knocking. Higher octane ratings do not necessarily mean more HP. The thing is, once you have enough octane for your engine, more octane does nothing. I believe the big difference in E85 power comes from the differences between ethanol and gasoline... ethanol has much more "cooling effect" as it vaporizes in the intake which will result in a denser charge in the cylinder. Also, I believe ethanol burns more completely than gasoline... Most importantly, even though the energy content of ethanol is less per gallon than gasoline, the correct stoichometric air-fuel ratio is about 9:1 vs about 14.5:1 for gasoline... this means you are burning considerably more ethanol and the end result is more energy content is released burning ethanol.