To lower prices at the pump, abolish the boutique fuel regime.
Apr 2, 2012, Vol. 17, No. 28 • By STEVEN F. HAYWARD
Quick: How many kinds of gasoline do we use in America? Most people would say three or six: regular unleaded, mid-grade, and premium, along with the ethanol blends of the same that have become nearly universal. The actual number is somewhere above 45, though hard to pin down exactly, according to the Government Accountability Office (GAO). It might even be closer to 70. Thirty-four states use specially blended gasoline, usually during the summer, which is one reason gasoline prices always rise during the “driving season.”
If you want a good idea of why this makes no sense, meet me in St. Louis. St. Louis, Missouri, uses one kind of gasoline; East St. Louis, Illinois, right across the Mississippi River, uses a different blend. Meanwhile, the surrounding suburbs use a third kind. Same metropolitan area, different gasolines, and they can’t be sold across jurisdictional lines, so refiners and distributors must maintain three separate systems for the three parts of the St. Louis metro area.
Is this a conspiracy of the evil oil companies to fatten their margins? Mostly no: It’s the product of EPA bureaucrats and the Clean Air Act, stubbornly maintained even though boutique fuels now deliver only marginal reductions in air pollution from cars, if any at all. And it’s a regulation President Obama could clear away if he wanted to. It wouldn’t deliver a large reduction in gasoline pump prices, but even 10 to 15 cents a gallon—a plausible figure for California’s market—would help.
The bizarre world of boutique gasoline owes its origin to the usual suspects: California (of course) and the congressional sausage-rolling involved in the writing of the Clean Air Act of 1990. When it comes to air pollution, there’s always been the country as a whole and then California, which because of its unique geography and climate has always had the nation’s worst air pollution levels by a considerable margin. Congress has always given California special leeway in crafting air pollution regulations that go beyond what the EPA requires of the other 49 states. But this frequently wreaks havoc with national industries, especially autos, since any auto mandate passed in California essentially is imposed on the entire country. Carmakers don’t want to make one kind of car for California and another for everywhere else. But oil refiners are a different matter: They could readily make a different kind of gasoline for California—one that would help the auto industry solve some of its compliance problems.
As California was ramping up its plans to fight smog in the late 1980s, there was talk of imposing very stringent tailpipe emissions standards on California cars, and perhaps even higher fuel economy standards to suppress fuel use. That’s when the oil refining industry stepped in with the idea to produce reformulated gasoline (RFG) for the California market that would deliver near-term environmental benefits by reducing emissions of unburned hydrocarbons from the auto fleet.
A few basics about ozone explain why this made some sense in 1990. Ground-level ozone is the trickiest air pollution problem. Unlike other forms of air pollution, like sulfur dioxide, where there is basically a straightforward relation between what comes out of a smokestack and what’s in the air you breathe, ozone is not directly emitted from cars or factories. It’s a combination of several chemicals that have to “cook” in sunlight. The amount produced depends on temperature, humidity, and geography. Different parts of the country can thus have wildly different ozone levels even with identical emissions, and the same metropolitan area can have wildly different ozone levels from day to day. Ozone tends to be much worse in hot summer weather than in winter, though there are exceptions, such as mile-high Denver and Minnesota. (Some areas of California actually experience higher ozone levels on weekends, when there is much less driving and industrial activity. This counterintuitive “weekend effect” is driving air quality specialists slightly crazy right now.)
A major component chemical for ozone is unburned hydrocarbons—essentially, gasoline that evaporates from car engines, gas pumps, and so forth. That’s one reason we started sealing car gas tanks with intake flaps, and redesigned gas pumps with those annoying sleeves to prevent evaporation of gasoline (called “fugitive emissions” in the trade). Reformulated gasolines aim to lower vapor pressure so there’s less evaporation, and use “oxygenates” to increase combustion in the engine so fewer unburned hydrocarbons go out the tailpipe. Back around 1990 it was calculated that reformulated gasoline could reduce hydrocarbon emissions from autos by as much as 20 percent.