Last week the US EPA proposed regulations known as Tier 3 rulemaking that would increase fuel efficiency and tighten controls on sulfur in gasoline. The EPA described the new rules as “sensible standards for cars and gasoline that will significantly reduce harmful pollution, prevent thousands of premature deaths and illnesses, while also enabling efficiency improvements in the cars and trucks we drive.”
The environmental community, many politicians and some business associations are strongly in favor of the regulations, while the refining industry is bitterly opposed. Both sides claim the regulations will save money and have very different views on how the rules will affect gasoline prices. The following is a collection of statements EPA sent in an email from prominent environmental, political and trade group voices speaking in favor of the regulations:
Deval Patrick, Governor of Massachusetts
“I applaud President Obama and the EPA for issuing this new rule, which is a significant step forward in reducing air pollution from vehicles. This rule means cleaner cars and cleaner fuels, which in turn means healthier communities across the country,” said Governor Deval Patrick. “This common sense regulation is a victory for a cost-effective and sensible way to clean our air.”
U.S. Sen. Kristen Gillibrand, N.Y.
“The implementation of Tier 3 emission standards is a big step forward for Americans,” said Senator Gillibrand. “More stringent emission standards would significantly decrease air pollution, create new jobs and increase worker’s economic productivity by reducing the number of sick days they take from lung and heart related ailments. We’ve cleared a crucial step in the process, and I will continue to urge the Administration to move quickly to finalize the rule this year.”
Michael Stanton, President and CEO, Global Automakers
“We have been anxiously awaiting this rulemaking because it is good for the environment and will help harmonize the federal and California programs for both vehicles and fuels. With 15 million new vehicle sales a year, automakers need predictable national fuel quality at the retail pump. Ultra-low sulfur gasoline is already available in California, Europe, and Japan and will enable automakers to use a broader range of technologies to meet the significant environmental challenges facing the industry.”
Mark MacLeod, Environmental Defense Fund
“The new Tier 3 standards will make our cars cleaner, and that means we’ll have cleaner air to breathe. Reducing tailpipe pollution will provide healthier, longer lives for millions of Americans for less than a penny per gallon of gas. That’s why updating the standards has such broad support from U.S. auto makers, state health commissioners, and health advocates.”
Luke Tonachel, Senior Vehicles Analyst, Natural Resources Defense Council
“These common-sense standards will save lives, save money and clean up our air – all at a minimal cost. Big Oil companies want us to believe these benefits aren’t worth it. But that’s because they care about profits above all else.”
Sounds great, right? How can we not enact these regulations? Not so fast say the country’s refiners. The following statements are posted on the The American Fuel & Petrochemical Manufacturers and American Petroleum Institute websites:
EPA’s proposed Tier 3 fuel regulations could raise refiners’ costs, provide little or no environmental benefit, and actually increase carbon emissions, according to API Downstream Group Director Bob Greco.
“There is a tsunami of federal regulations coming out of the EPA that could put upward pressure on gasoline prices,” Greco said. “EPA’s proposed fuel regulations are the latest example.
Consumers care about the price of fuel, and our government should not be adding unnecessary regulations that raise manufacturing costs, especially when there are no proven environmental benefits. We should not pile on new regulations when existing regulations are working.”
EPA’s Tier 3 proposal would increase the cost of gasoline production by up to nine cents per gallon, according to an analysis by energy consulting firm Baker & O’Brien. If EPA adds a vapor pressure reduction requirement in a separate regulation, it would push the cost increase up to 25 cents a gallon, according to Baker & O’Brien. Separately, gasoline costs would also rise 30 percent by 2015 unless changes are made to federal ethanol mandates, according to a newly-released study by NERA Economic Consulting. Greco also cited EPA’s upcoming proposal for new ozone standards that could further increase manufacturing costs.
“Implementing the new requirements would actually increase greenhouse gas emissions because of the energy-intensive equipment required to comply,” Greco said. “We urge the administration to bring common sense back into the regulatory process. Unnecessary regulations just mean higher costs and lost jobs.”
API is a national trade association that represents all segments of America’s technology- driven oil and natural gas industry. Its more than 500 members – including large integrated companies, exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms – provide most of the nation’s energy. The industry also supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers $86 million a day in revenue to our government, and, since 2000, has invested over $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.
The American Fuel & Petrochemical Manufacturers (AFPM) is concerned by today’s decision by the Environmental Protection Agency (EPA) to proceed with Tier 3 rulemaking imposing new vehicle emissions and fuel standards. The proposal will require further reductions in sulfur levels in gasoline to an average of 10 parts per million (ppm), a seventy percent drop from today’s very low levels without significant benefits.
“While we haven’t had the opportunity to review the report, EPA’s decision to move forward with Tier 3’s gasoline sulfur reduction program is completely without merit given that the Agency has not previously offered any cost/benefit analysis to justify this onerous rulemaking,” said AFPM President Charles T. Drevna. “The Agency’s failure until today to provide any information on the need for this discretionary rule, despite repeated requests from American fuel manufacturers, strongly suggests the lack of a credible case.”
Since 2004, refiners have reduced sulfur levels in gasoline from an average of 300ppm in 2004 to an average of 30ppm today. The adverse economic impacts of Tier 3 rulemaking have attracted bi-partisan Congressional concern, and a group of House and Senate Democrats have sent letters to the Administration asking for a more transparent process and information on potential benefits before proceeding with final rulemaking.
American refiners have already spent billions of dollars to achieve a 90 percent reduction in sulfur levels, but Tier 3 will require another $10 billion in new infrastructure and another $2.4 billion per year in operating costs on an industry already burdened by questionable regulations.
“Tier 3 rulemaking that targets trace amounts of sulfur in gasoline is not worth the direct threat to our domestic fuel supply, consumer cost at the pump and American jobs,” Drevna concluded.