To lower prices at the pump, abolish the boutique fuel regime.
Apr 2, 2012, Vol. 17, No. 28 • By STEVEN F. HAYWARD
But hey, it’s all worth it if our children can breathe cleaner air, isn’t it? This is where boutique gasoline becomes a perfect case study in bureaucratic inertia and industry rent-seeking. The case for reformulated gasoline is largely obsolete, delivering only marginal air quality benefits today, if any. The 1990 Clean Air Act also phased in very tight automobile tailpipe standards that have reduced emissions from new cars and trucks by as much as 95 percent from the 1990 models, most of which have long since left the roads. Hydrocarbon emissions from autos have been falling at a sustained rate of about 8 percent a year for the last decade, as the auto and truck fleet turns over to newer models. This trend is going to continue for a decade or more. The EPA still claims reformulated gasoline delivers 20 to 25 percent emissions reductions, but this is based on data from the older car fleet. The EPA hasn’t bothered to update its emission models, as the GAO noted: “The extent of reductions remains unclear, however, because these estimates are based, in part, on data regarding how special gasoline blends affect emissions from older vehicles, and these data have not been comprehensively validated through testing on current vehicle types with newer emissions controls. . . . [I]mprovements in automobile technology . . . may have negated many of the benefits of adding oxygenates to gasoline.”
Here’s an opportunity for President Obama to “do something” about gasoline prices, even if it’s only by a dime per gallon. (And the difference between $4.95 gas and $5.05 gas might be the difference between reelection and defeat.) The Clean Air Act allows the EPA to waive the boutique gasoline requirements in the event of supply disruptions or shortages. Indeed, the boutique gasoline requirements were waived in the aftermath of Hurricanes Katrina and Rita in 2005, when more than half the Gulf Coast refineries were knocked out of commission for several weeks. During the waiver, we imported gasoline from overseas to fill the gap, and prices were kept stable. There was no noticeable uptick in ozone levels in the EPA data. While high-priced gasoline might not meet the precise definition of a disruption or shortage, it shouldn’t be a problem for the clever lawyers of the Obama administration to come up with a plausible legal rationale for suspending the regulations.
Failing that, the House should pass a quick amendment to the Clean Air Act abolishing the boutique gasoline regime, and then dare the Senate or the president to block a measure that would offer relief at the pump this summer. The ethanol lobby would scream, along with environmentalists who never met a regulation they didn’t like, while refiners would quietly rue the loss of an artificial market-segmenting system that expands their profit margins. Sounds like a win-win all the way around.
Steven F. Hayward is the F. K. Weyerhaeuser fellow at the American Enterprise Institute and author, most recently, of The Politically Incorrect Guide to the Presidents: From Wilson to Obama (Regnery).