US Senate panel okays bill banning MTBE

The US Senate Environment and Public Works Committee Thursday approved a bill banning methyl tertiary butyl ether (MTBE) from gasoline and mandating use of ethanol. The compromise bill would eliminate use of MTBE in reformulated gasoline (RFG) within 4 years or allow the Environmental Protection Agency to ban it sooner. State governors could waive the 2 wt % requirement for oxygen in RFG.


Washington, DC�The US Senate Environment and Public Works Committee Thursday approved a bill banning methyl tertiary butyl ether (MTBE) from gasoline and mandating use of ethanol. Gasoline leaks have caused MTBE to contaminate ground water supplies around the US.

The compromise bill would eliminate use of MTBE in reformulated gasoline (RFG) within 4 years or allow the Environmental Protection Agency to ban it sooner. State governors could waive the 2 wt % requirement for oxygen in RFG.

The bill would require more use of alternative fuels, including ethanol, by setting a minimum content for �renewable� fuels in all motor fuels sold. The level would start at 0.6% in 2002, rising a tenth of a percentage point yearly until reaching 1.5% in 2011.

Refiners could satisfy the requirement by blending renewable fuel additives or buying credits generated by the sale of alternatively fueled vehicles. EPA would be authorized to exempt small refiners from the program.

Sen. Robert Smith (R-NH), committee chairman, stressed, "It hasn't been an easy road" to the compromise and urged other senators to accept it.

Refiners object
The National Petrochemical & Refiners Association strongly opposed the bill.

It said, "Domestic refiners are already stretched to the limit meeting consumer demand and current environmental requirements. Fuel mandates and additional composition changes required for gasoline, such as a cap on aromatics content, will hinder rather than help refiners' efforts to produce adequate fuel supplies.

"Further, the provisions of the bill allowing states to individually change gasoline volatility requirements [due to the increase in volatility and evaporative emissions associated with ethanol] will make gasoline distribution infinitely more complicated and costly. Consumers who experienced this summer's gasoline shortfalls in the Midwest or the heating oil supply problems earlier this year in the Northeast are well aware of the cost of additional supply and distribution constraints on fuel markets."

Bob Slaughter, NPRA general counsel, said Congress created the problem when it mandated a oxygen content for RFG.

"It is ironic, and most unfortunate, that the Senate environment committee has chosen to add a new mandate rather than repeal the earlier one."

API agrees
The American Petroleum Institute said the bill �goes substantially beyond resolving the MTBE issue and likely would create many unintended consequences. Simply substituting one unnecessary and costly government mandate for another is not sound public policy," it said.

"This proposal imposes massive new 'alternative and renewable fuel' requirements that would, by the year 2011, nearly quadruple the mandated share of ethanol in gasoline, far beyond today's levels. The potentially negative impacts on the sufficiency and reliability of gasoline supplies, costs to consumers, and environmental implications of such a mandate would be significant. It also would assure the use of ethanol in gasoline in every region of the nation, including the Northeast.�

API said the US Energy Information Administration estimated the mandated blending of ethanol in gasoline would cost, on average, an additional 5.7�/gal.

"It also creates the potential for further fragmenting of the nation's fuel supply and distribution system by allowing any area of the country to opt in to the federal RFG program.

�The proposal does not consider the impact of expanding this program on the gasoline distribution system and it is contrary to the intent of Congress in the Clean Air Act Amendments that required this cleaner-burning and more expensive gasoline only in areas that have significant air quality problems.�

API supported a measure by Sens. James Inhofe (R-Okla.) and Jeff Bingaman (D-NM) that proposed a phase-down of MTBE use without an oxygenate mandate for gasoline.

Supply impact
The Oxygenated Fuels Association, Arlington, Va., released a study that said an immediate MTBE ban could have a significant impact on the price and supply of both gasoline and home heating oil this winter, especially in the Northeast.

The study, conducted by Massachusetts-based Energy Security Analysis Inc. (ESAI), concluded that removing MTBE from the US RFG pool would constrict an already tight gasoline supply, increasing gasoline prices and reducing the amount of distillate available for the production of home heating oil.

OFA said, "This would add to the already dire predictions of a 30% rise in home heating oil this winter over last winter recently forecast by the federal government."

The ESAI paper said removing MTBE would squeeze gasoline yields, leading to lower supply and upward pressure on gasoline prices. And that could push distillate production lower.

"Secondly, internal refinery constraints caused by the inability to blend MTBE may prevent refiners from running their plants at higher levels of throughput, which would also likely impact heating oil supplies."

ESIA said ethanol is not a good substitute for MTBE in RFG.

"[Ethanol] only requires half the volume of MTBE on an oxygenate-level basis, and summertime VOC [volatile organic compounds] restrictions on gasoline would require...blending components such as pentanes to be removed from reformulated gasoline blended with ethanol. Refiners would have to import scarce and expensive blending components such as alkylate, in order to both make up volume and the resulting octane deficit."

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