U.S. refiners face technological demands in the next few years as challenging as those they faced satisfying aviation fuel needs in World War 11 and removing lead from gasoline in the 1970s and '80s. And they'll have to meet those demands while conducting business under market conditions no one can predict.
Congress, it seems, could not endure another election without having toughened the Clean Air Act. It didn't matter that, since lawmakers began work on a reauthorization bill, the U.S. economy has faltered and a Middle East crisis has raised gasoline prices. Congressional conferees passed a bill requiring measures that will impose huge burdens on the economy, including higher gasoline costs. When politics and environmentalism embrace in the sunlight, consumer and economic interests tremble in the shadows.
COULD HAVE BEEN WORSE
Still, it could have been worse--an assessment borne out by extremist whines that Congress didn't sting corporations enough. The overall effect on refiners will be difficult to assess until the complex legislation is published and its requirements clarified in implementing regulations. In any case, refiners have already turned to the task of developing less-polluting motor fuels. The question only time can answer is whether the new law on balance helps or hurts the effort.
The legislation still indulges in environmental overkill. For example, refiners apparently will have to add oxygen to gasoline year-round in ozone nonattainment areas without winter carbon monoxide pollution problems. If they can secure needed plant construction and modification permits, refiners can meet the requirement, of course. But it's simply cost with no benefit, a much too frequent shortcoming of CAA reauthorization politics.
A larger question is whether refiners can meet all of the new law's requirements by the specified deadlines. Congress has mandated a product for which manufacturing technology does not exist. And it has required that the product be available for sale in a very short time. It may be asking the impossible. If so, is it prepared for gasoline to become unmarketable in some of the country's most populous cities as early as 1995?
The new CAA bill requires refiners to produce gasoline that reduces emissions by 15% within 5 years and by more than that afterward. Refiners don't possess the formula for such a fuel. They're working on it, in part through a joint effort of unprecedented scale with the auto industry. But, as in all major research undertakings, there can be no guarantees.
Moreover, refiners must invent a fuel that not only meets emission reduction targets but also satisfies new and often unnecessarily strict gasoline content mandates for benzene, aromatics, and oxygen. Because of the technical uncertainty, industry sought provisions for emission target adjustments based on feasibility. The provisions aren't part of the new bill.
STARK ALTERNATIVES
Five years from now, therefore, U.S. motorists in many cities may be burning newly reformulated fuels that pollute much less than current gasoline--and probably paying much more for the product. On the other hand, refiners might not have found the formula by then, and there will be no legally marketable fuel at all. Those stark alternatives are about to be made law.
So refiners have serious work to conduct. And they're not alone. Lawmakers may have demanded the impossible. They may have jeopardized near term motor fuel supplies in most major U.S. cities. They may yet have to get serious themselves and compromise on environmentalist demands.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
