WAY CLEAR FOR REFORMULATED GASOLINE RULE

The U.S. government, petroleum industry, and environmentalists have agreed on a rulemaking that will usher reformulated gasoline into the marketplace. The 1990 Clean Air Act amendments require the Environmental Protection Agency to issue parameters for reformulated gasoline and oxygenated gasoline sold in U.S. cities with air pollution problems (OGJ, Aug. 12, p. 44). The agreement will cost refiners several billion dollars and consumers as much as 50/gal but could reduce U.S. oil imports

Aug. 26, 1991

4 min read

The U.S. government, petroleum industry, and environmentalists have agreed on a rulemaking that will usher reformulated gasoline into the marketplace.

The 1990 Clean Air Act amendments require the Environmental Protection Agency to issue parameters for reformulated gasoline and oxygenated gasoline sold in U.S. cities with air pollution problems (OGJ, Aug. 12, p. 44).

The agreement will cost refiners several billion dollars and consumers as much as 50/gal but could reduce U.S. oil imports 300,000 b/d due to decreased gasoline volatility and more use of oxygenates.

The pact is an outgrowth of a "regulatory negotiation" process involving EPA, the refining industry, environmentalists, and state and local governments. The thirty parties involved pledged not to sue to block the resulting rule, which EPA will issue this fall.

WHAT'S REQUIRED

Under the agreement, cities with carbon monoxide problems will require use of oxygenated gasoline during winter months starting in 1992. Nine urban areas with severe ozone levels will take the same step in 1995.

The parties agreed the oxygenated fuel program should consider the carbon monoxide problem as well as distribution of the fuel in the U.S. Oxygen levels will be at least 2%, but the average will be 2.7% for all oxygenated fuels in affected areas.

Local governments will be able to conduct an averaging program that will allow refiners producing more than 2.7% oxygen gasoline to sell credits for the excess to refiners with oxygen levels below that level.

The exact formula for reformulated gasoline has not been set, but it will have lower volatility levels, which reduce hydrocarbon emissions. The formula also will place limits on sulfur, olefins, aromatics, benzene, and other toxics.

The agreement bans refiners from selling benzene and other high polluting compounds to other refineries making conventional fuel in other parts of the country.

The agreement also resolves issues concerning EPA certification of the new gasoline blends and methods of averaging for volatile organic compounds, benzene and toxics. And it calls for a survey to assure compliance with the regulations in each of the marketing areas.

The oxygenated fuels program is designed to reduce carbon dioxide emissions in 41 cities with carbon dioxide problems, reducing carbon dioxide emissions from all cars on the road by about 20%.

REFINERS CONCERNED

Urvan Sternfels, National Petroleum Refiners Association president, noted the package represents a series of compromises that will give refiners some certainty for investment decisions that must be made immediately to meet strict deadlines contained in the law. But he observed refiners still don't know what reformulated gasoline is going to look like or how much of it will be required.

He said, "We are concerned about the monumental costs and likely changes in the competitive posture of many refining companies," he said. Some refiners said they could not agree with a regulation that would end their participation in the gasoline business.

The American Independent Refiners Association said, "The negotiated rulemaking... may represent a success for the negotiated rulemaking process, but its implementation represents only another one of the life threatening challenges faced by small and independent refiners."

Craig Moyer, counsel to AIRA said, "I am very concerned that many small and independent refiners will not survive and that their demise means the American consumer will be forced to rely on the generosity of a big oil oligopoly. The small and independent refining sector looks forward to working with EPA to ensure these concerns do not come true."

The American Petroleum Institute said, "The agreement will result in very challenging regulatory requirements for the industry, but the industry is committed to producing reformulated fuels as part of its contribution to improved air quality."

Charles DiBona, API president, said the agreement will help industry make reformulated gasoline as efficiently as possible, and that probably will be only in the most sophisticated refineries.

He added if other urban areas, besides the nine on the list, "opt in" the reformulated gasoline program, industry will find it hard to supply enough fuel and may need an extension from EPA.