It does collect mostly at the bottom of the tank but can still make it through the fuel pump and into the combustion chambers, causing stumbling. I know because it happened to me from a gas station that accidentally had water in their tank. It was so bad that I had to floor my car just to go 60 mph and it was really rough power delivery. If you suspect water in the tank, use one of the products that solubizes the water in the gas so it burns gradually instead of in big drops.