Question

Which best describes the heat that you can feel on the engine of a running car?

Answer 1

The heat is unusable  and  is being lost  to the surrounding -- assuming that the engine has reached operating temperature   and is not increasing or decreasing in temperature. 

Answer 2

Answer is: The heat is unusable and lost to the surroundings.

Gasoline is a mixture  of many different hydrocarbons: alkanes (paraffins), cycloalkanes  and alkenes (olefins).

Balanced chemical reaction of gasoline combustion:

C₈H₁₈ + 25/2O₂ → 8CO₂ + 9H₂O + energy.

One part of energy produced in combustion of gasoline is used for car ungine (kinetic energy) and other part of that energy (in form of heat) is lost to the surronding and engine does not use it.