GM Endorses Cleaner-Burning Reformulated Gas for Its Models
General Motors Corp. is recommending that all its cars--new vehicles and those already on the road--use cleaner-burning “reformulated” gasolines to help the environment, GM President Lloyd E. Reuss told oil refiners Monday.
GM’s endorsement of the new gasolines--now offered by most major oil companies in one form or another--is apparently intended to help create a bigger market for the fuel.
The auto and oil industries see the less-polluting gasolines as one way to meet pending clean-air regulations in California and across the country without reinventing the automobile or its fuel.
GM’s pronouncement at a convention in San Antonio was welcomed by such companies as Atlantic Richfield, which was the first oil refiner to offer such a fuel in September, 1989, and remains its leading marketer. Most reformulated gasolines achieve lower emissions by adding alcohol-based chemicals, known as ethers, that promote more efficient burning.
But GM officials said the car maker planned no big push on behalf of reformulated fuels other than to recommend them in the owners’ manuals of 1992 models.
As such, the auto firm might not be doing oil companies any favors.
The various versions of reformulated gas are available only on a limited, regional basis around the country from about 10 oil companies. And much of what is marketed as reformulated gasoline doesn’t meet standards set out in the federal Clean Air Act.
Robert Cunningham, senior vice president at Turner, Mason & Co. of Dallas, a refinery consulting firm, said there isn’t enough ether-making capacity to satisfy the pending clean-air standards nationwide.
GM’s recommendation “is fine from their viewpoint, but it doesn’t accelerate the availability of ether,” said Cunningham, whose firm is conducting economic studies for a joint oil-auto industry research project on the subject.
Scott T. Jones, a former Arco and GM economist who heads AUS Consultants in Philadelphia, said Reuss’ remarks underscored how Detroit has sought to shift the clean-air burden to the oil industry.
The two industries have been at odds for years over various regulatory and quality issues; the auto firms complain that they paid most of the multibillion-dollar costs of meeting auto emissions regulations of the 1970s.
But the new federal Clean Air Act went easy on the auto industry. Among other things, it requires oil companies to offer reformulated gasoline year-round by 1995 in the nine dirtiest cities and in 40 other cities in winter. Stiffer standards are already in place in California.
The auto and oil industries have embarked on a joint research program to find ways of cleaning up gasoline. But oil companies face the heaviest expenditures because the new fuels require major refinery changes that the industry has estimated could cost $50 billion.
Arco, for one, says it has swallowed the two- to four-cent a gallon refining costs of its two grades of reformulated gasoline, EC-1 and EC Premium. The investment has paid off in sales volume, at least. According to the company, sales have increased up to 19% over the formulas that the new fuels replaced--sales apparently stolen from competitors.
For now, though, demand for reformulated gasolines is weak everywhere but California.
“If I were the head of a refining division sitting there listening to Reuss, I would have said, ‘Thanks a lot, buddy,’ ” Jones said. “ ‘Why don’t you set aside $100 million to advertise the gasoline?’ ”
Reuss told the National Petroleum Refiners Assn.: “Starting immediately, the corporation is recommending the use of reformulated gasoline in all of its existing and future model cars and trucks. . . .
“If we start to encourage people to use these fuels now, we can help create a stronger market for them. We believe that reformulated gasoline can be a real clean fuel.”
He also reminded the refiners that GM is bringing to market cars and trucks that can be powered by methanol, natural gas and electricity--all of which pose potentially major competitive threats to oil.
