Additive Blamed for Gas Price Rise
Hoping to derail proposed federal legislation that would boost the use of ethanol in gasoline, a California congressman and others on Wednesday said the additive helped trigger price increases in the spring and has worsened the state’s gasoline supply troubles.
“The lessons learned in California may very well be relevant nationwide,” said Rep. Doug Ose (R-Sacramento), who presided over a House subcommittee hearing in Diamond Bar to discuss California’s move to ethanol-blended gasoline.
If Congress passes an energy bill that includes an ethanol requirement, Ose added, “every American living outside the ethanol-producing centers in the Midwest could experience the gasoline price increases that California has seen due in part to ethanol.”
Ethanol is a corn-based liquid that is added to gasoline to reduce air pollution. A wide-ranging energy bill that already has gained House approval would mandate that use of ethanol in the country’s gasoline supply more than double, to 5 billion gallons, by 2010.
Ose and other California lawmakers have opposed the mandate, arguing that the additive already costs the state’s motorists 3 cents to 6 cents a gallon and is not necessary to meet federal requirements for cleaner-burning fuel. Amendments that would have eased the effects of the mandate on California failed to pass.
California refiners have used MTBE, or methyl tertiary butyl ether, as an additive to reduce air pollution. But MTBE has been found to pollute groundwater and will be banned in gasoline here starting Jan. 1.
California Energy Commission officials contended at Wednesday’s hearing before the House Government Reform subcommittee on energy policy that the state’s gasoline could meet clean-air standards without additives. But refiners are effectively forced to use ethanol because existing federal law requires all fuels to contain oxygenates to reduce pollution. The only two oxygenates available are ethanol and MTBE.
California officials have been denied a waiver from the federal requirement for oxygenates, and the state is suing the U.S. Environmental Protection Agency for an exemption.
Many of the state’s refiners already have made the changeover to ethanol. A federal report recently concluded that the switch contributed to a statewide rise in gasoline prices, which peaked at an average of $2.145 a gallon March 17 for self-serve regular grade. Other factors included a spate of refinery outages, as well as higher crude oil prices resulting from an oil strike in Venezuela and fears about war in Iraq.
Another problem for California is that the MTBE gasoline recipe calls for 11% of the additive, whereas the ethanol blend uses about 6% of that additive by volume. Experts say the loss of volume will reduce fuel stocks by 5% in the winter and by 10% in the crucial summer months.
“This should be a warning to states that are going to go through this next,” said Yier Shi, a spokesman for Ose, noting that New York and Connecticut also will ban MTBE starting Jan. 1.
Bob Gregory, vice president and general manager of Valero Energy Corp.’s Wilmington refinery, said the federal government should focus on setting standards for emissions and not try to mandate how to meet those standards.
