EPA RULE MAY LEAD TO CLEANER AIR BUT WILL RAISE COST OF GAS 2 CENTS-10 CENTS
By Reuter News Service
The nation's air may be cleaner this summer but Americans can expect to pay 2 cents to 10 cents a gallon extra for gasoline as a result of a new anti-pollution rule, according to industry analysts.
Analysts see the price hikes coming as a result of the Environmental Protection Agency decision Friday to adopt new measures to lower the volatility of gasoline. Gasoline vapors react with sunlight to produce harmful levels of ozone.
The EPA ruled that fuel volatility, effective May 1, must be between 9.5 and 10.5 pounds per square inch of Reid Vapor Pressure (RVP) - an industry measure - down from 11.5 RVP now.
The rule will reduce pollution in urban areas by 13 percent, according to EPA administrator William Reilly.
But oil analysts said pump prices may go up as the industry is forced to use more expensive additives other than the commonly-used but volatile butane that currently makes up about 5 percent of gasoline.
Peter Beutel, analyst with Elders Futures Inc., said prices could rise as much as 5 cents a gallon this summer depending what kind of octane enhancers are used to replace butane.
Edward Rothschild of the Citizens Labor Energy Coalition said the EPA rule could be an excuse for oil companies to raise prices as much as 10 cents a gallon.
One of the things oil companies can do is reduce octane levels,'' Rothschild said.A trade-off in reducing the vapor pressure could be accomplished if they reduce octane, but they don't want to do that because high octane gasoline is their most profitable product.
``Refiners are using the RVP issue as an excuse to raise prices,'' he said.
The industry's problem may be most acute in the Northeast, where ozone concentrations are high and where Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode Island and Vermont have passed stricter regulations than required by the EPA.