US EPA considers waiving summertime RFG specs

WASHINGTON, DC�Last week the Clinton administration asked the US Federal Trade Commission to investigate high gasoline prices in the Chicago and Milwaukee metropolitan areas, and administration officials met with refiners to discuss the situation (OGJ Online, June 16, 2000). Now the US Environmental Protection Agency is considering whether to waive rules requiring summertime reformulated gasoline�with its reduced volatility specifications�and allow refiners to sell conventional gasoline until the crisis passes.

Energy Sec. Bill Richardson said Tuesday, "We're very concerned about gasoline prices in the Midwest, especially around Chicago and Milwaukee. Our experts are talking with EPA to see what we can do in the near term to bring some relief to consumers...and get more gasoline into the market."

Retail gasoline prices were above $2/gal in the two cities. Richardson said refiners need to explain "why prices are so high for reformulated gasoline�30-40� higher than the national average�when it costs a few pennies more [over regular gasoline] to produce it."

President Bill Clinton recently said the high prices were "very frustrating to me. I'm quite concerned about it.

"We know that the prices were affected by the shutdown of a refinery, which is coming back up; a leak in a pipeline, which is the cheapest way to transport gas; and an unusual increase in the demand in the Chicago-Milwaukee area."

Vice Pres. Al Gore charged, "The big oil companies' profits have gone up 500% in the first part of this year, just at the time when these prices are going sky-high in the Midwest. I think this justifies a much broader investigation into possible collusion, price gouging, and antitrust violations."

On Monday, the American Petroleum Institute urged the US Office of Pipeline Safety to lift an 80% pressure limit on Explorer Pipeline Co.'s line into the market. The southern leg of Explorer's 560,000 b/d Houston-to-Chicago line has been limited to 490,000 b/d since a rupture near Greenville, Tex., in March. The northern section into Chicago has operated at the usual 350,000 b/d.

Louisiana problem
The Department of Energy took the unusual step of releasing up to 1 million bbl of crude from the Strategic Petroleum Reserve to relieve a Louisiana supply problem.

The Conoco Inc. refinery at Westlake and the Citgo Petroleum Co. refinery at Lake Charles both were unable to receive waterborne crude shipments after a commercial dry dock collapsed into the Calcasieu Ship Channel. The US Corps of Engineers dredged a new channel while the US Coast Guard was working to remove the collapsed dock. Richardson said Tuesday, "Oil traffic is moving once again, and the problem seems to be resolved."

At the requests of the companies, Richardson had ordered SPR crude from the nearby West Hackberry storage site released to the refineries via pipeline. The companies will replace the crude later with oil of equivalent value.

Sen. Charles Schumer (D-NY) has been urging the Clinton administration to release SPR oil to thwart production limits by the Organization of Petroleum Exporting Countries. He said release of the oil to the Louisiana refineries shows the administration "is willing to allow the government to influence the market."