The administration of US President Bill Clinton has played the ethanol card in its effort to win Vice-President Al Gore a promotion next November. If it succeeds, consumers of gasoline, distracted at the moment by levitated prices, will suffer.
Environmental Protection Agency Administrator Carol M. Browner and Agriculture Sec. Dan Glickman last week proposed regulatory and legislative changes curtailing use of methyl tertiary butyl ether in gasoline (see related story, p. 36). Because MTBE has leaked into supplies of drinking water, EPA proposes that it be replaced in gasoline by renewable substances. That means ethanol distilled from grain, which requires a 54¢/gal federal tax credit to make sense as a fuel additive.
Preferred oxygenate
MTBE and ethanol help refiners meet mandates for oxygen in reformulated gasoline, which they must sell in areas troubled by ozone smog, and oxygenated fuel, required under a smaller program for wintertime carbon monoxide pollution. Both oxygenates boost octane and extend fuel volumes.
Refiners prefer MTBE. Ethanol has disadvantages beyond its dependency on the tax credit. Gasoline containing ethanol needs relaxation of volatility standards. And ethanol requires special handling. For those and other reasons, 87% of reformulated gasoline contains MTBE.
If MTBE were a major threat to public health, and if oxygen were essential to reformulated fuel, EPA's initiative would be proper. But neither condition applies.
The widespread appearance of MTBE in drinking water means that 1) gasoline storage tanks still leak, and 2) MTBE migrates underground farther and faster than other gasoline components. In nearly all its occurrences in drinking water, MTBE amounts have been sufficient to annoy people but not make them ill. The problem is tanks, not toxicity.
And oxygen isn't necessary in reformulated gasoline. The air-quality improvements that the program has achieved do not depend on the fuel's containing oxygen. In fact, oxygenates can increase evaporative emissions of ozone-forming compounds. Refiners say they can meet reformulation requirements without adding oxygen. Some of them would use oxygenates anyway.
But there is no good reason to deny refiners the option. The air-quality performance of reformulated gasoline doesn't depend on oxygen, and the government shouldn't require it.
So EPA is correct in proposing to eliminate the oxygen mandate in reformulated gasoline but wrong in recommending that the government mandate renewable additives. Its mischaracterizations of MTBE's problems and of oxygen's role in reformulated fuel undergird a bid for farm-state support for Gore in his campaign for the US presidency.
EPA tried to implement a renewable mandate for the reformulated fuel program on its own authority earlier in the Clinton administration and learned in court that the authority doesn't exist. Now it's using the issue to make Republicans controlling Congress choose between economic sense and favor from farmers eager for a state-induced boost in demand for grain.
The timing of this squeeze is crafty and despicable. Oil consumers are angry about recently extreme prices. They'll support anything that oil companies resist. But they'll hurt themselves in the long run by supporting EPA's initiative.
Capacity losses
Success by EPA would lengthen a growing list of environmentally related investments that refiners must make just to stay in business-this time for the separate transportation and storage equipment that required by ethanol (see Journally Speaking, p. 23). It's another reason from an overly aggressive and cynically political EPA to doubt the wisdom of staying in the refining business.
As more and more companies decide to seek more productive uses for capital-as they will if Congress doesn't bridle EPA-losses to refining capacity will limit gasoline supply. And consumers will come to view this fleeting era of $1.50/gal fuel as the good old days.
