Maureen Lorenzetti
Some US states, especially in the Northeast and on the West Coast, are growing increasingly worried that current reformulated gasoline (RFG) rules will help drive retail prices to record highs before June.
Congress may retool the RFG rules before then as part of a comprehensive energy bill.
Pending House and Senate proposals revise RFG rules because of states' water contamination concerns connected with the clean-fuel additive methyl tertiary butyl ether. A final bill is expected to remove the 2 wt % oxygenate requirement, protect fuel ethanol market share through a renewable fuels standard, and create a credit trading program.
MTBE producers may be encouraged to stop making the oxygenate through a tax break; the controversial additive also may be phased down and shielded from product liability lawsuits.
The odds
But an RFG rule update is just one of several big-ticket items packed into draft energy legislation. Also under consideration within the same bill are sweeping changes to the wholesale electricity grid, energy tax incentives for production and conservation, and new public land permitting guidelines.
Republican leaders say they want legislation this spring. But lawmakers have a habit of not making their deadlines, and this year there are plenty of excuses.
Higher gasoline prices on both coasts may spur action, but none of those states have lawmakers in the Republican leadership controlling Congress. And in the wings there are potential battles looming over a highway projects bill and postwar Iraq spending. Both measures are bigger attention-getters than an energy bill.
EPA role
RFG help is not forthcoming from the Bush administration.
New York state officials asked EPA Jan. 6. to waive the federal clean air rule that requires fuel suppliers to sell RFG with an oxygenate, typically MTBE or ethanol (OGJ Online, Jan. 10, 2003). New York's argument to EPA is that oxygen-free clean fuels do a better and cheaper job reducing smog than ethanol.
It's an argument that California tried and failed to use with EPA in June 2001.
In an Apr. 1 letter to New York regulators, EPA did not reject the state's argument outright. Instead, the agency said New York failed to supply enough technical information "to evaluate the merits of your request."
EPA wants detailed technical information, including refinery and emission modeling, that could take the state several months to generate.
For now both New York and California plan to ban MTBE next year. Connecticut, meanwhile, has a ban on MTBE that takes effect this October, although the legislature is mulling an extension. By 2006, a total of 16 states plan to have bans in place.
Congress needs to act now, according to industry. Otherwise there could be dozens of boutique fuels that exacerbate supply and price problems, notes American Petroleum Pres. Red Cavaney. He thinks the chances are good Congress is listening. But if Congress does fail to act, suppliers will "sit down and work with our customers" to avoid a crisis, he says.
