Higher compression usually increases combustion efficiency - that is to say, for a given air/fuel charge, a higher compression engine can usually convert more of the stored energy in the fuel into thermal energy and therefore can make more power. Higher compression also dramatically increases NOx emissions, which is one of the reasons why many 70's and 80's vehicles had such low compression and therefore low output. Compression alone doesn't change the powerband. The cam and head flow determine that. Graphically speaking, it doesn't shift the curves left and right, it shifts them vertically. Between about 7:1 and 12:1, a one point increase in compression is usually worth about 3% hp change. A 300 hp engine at 9:1 would have about 309 hp if you did nothing but change to 10:1. Compression alone isn't a big motivator for more power, but more compression means you can step up the game when it comes to cam and power.
Higher compression also tends to require higher octane fuel to prevent self-ignition under the higher pressures/temperatures in the cylinder.
Compression is best chosen based on the cam you'll use, and the cam you'll use is best determined by how you plan to use the vehicle. Larger duration cams do a poor job of trapping the maximum charge in the cylinder at low RPMs. (that's why they have "lumpy" idles) For this reason, as cams get larger, so should the compression. Bigger cams need more compression to compensate for the fact that they trap less air/fuel charge in the cylinder at lower RPMs. Conversely, a small cam does an excellent job of trapping max air/fuel at low RPMs, so compression that is too high will not be a good match. If you have insufficient compression for your cam, the engine will feel soggy and weak. If you have too much compression for your cam, you'll need more octane than you can get at the pumps, and may have trouble getting the starter to overcome the pressures in the cylinder
Another factor to consider is head design. Aluminum heads soak heat away much faster, so that can have a slight effect of reducing cylinder pressure. Often times builders will add an extra half to one point of compression with aluminum heads. Chamber and piston style also play a role. Domed pistons slow down the flame front which means they require a little more ignition advance. This doesn't really affect how the cam/compression plays together, but it will affect how little octane you can get away with for a given combo.
Last edited by curtis73; 05-17-2009 at 10:48 AM.