Clean Fuel Regulations: EPA, Oil Industry Vie over Effect on Gas Prices

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The Obama administration proposed on Friday new and more costly regulations of the refining industry to produce cleaner gasoline and clearer skies.

If the new rules are implemented as scheduled in 2017, the Environmental Protection Agency (EPA) says, they will spare thousands of people from premature death and prevent respiratory problems in tens of thousands of children. The cost: on average less than a penny gallon.

Not so, says the oil industry, which has been battling the EPA over the proposed rules. The new rules will add as much as nine cents a gallon to the cost of making fuel and will produce ambiguous results, says The American Petroleum Institute. API, the industrys lobbying arm in Washington, refers to the proposed new rules as part of a tsunami of regulations the industry faces this year that could add as much as 65 cents to the cost of producing a gallon of fuel in the future.

Gasoline prices are politically sensitive. Consumers often know how much they have paid for a gallon of gasoline compared with their prior fill-up. When pump prices are rising, consumers grumble and, if prices get high enough, cut back on other discretionary purchases. As a result, economists refer to rising fuel prices as a tax on the economy.

But will Americans pay more for fuel and smile about if they believe it will result in cleaner air?

Some will, but the majority wont, answers Tom Kloza, chief oil analyst at GasBuddy.com. There is a sense among a lot of people that we are entitled to cheaper fuel prices than the rest of the world.

The proposed changes would make US standards the same as most of Europe, Japan, and South Korea, Mr. Kloza says. We would be joining 45 other countries with tougher fuel standards, he says.

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Republicans quickly attacked the proposed regulation. The Obama Administration is modeling our regulations after California, which has the worst economy in the nation, and todays announcement is essentially a guaranteed energy tax hike and unfortunately is just one of many radical policies coming out of this Administration that will deal a heavy blow to middle-class families and small businesses, said Rep. Steve Scalise of Louisiana, chairman of the Republican Study Committee, in a statement.

In January, Greenberg Quinlan Rosner Research, often associated with Democratic issues, conducted what it termed a bipartisan survey of 800 registered voters for the American Lung Association on whether Americans favored tougher fuel regulations and improved antipollution laws. It found 62 percent of voters supported new gasoline and vehicle standards, and 32 percent opposed them.

If the new rules are implemented as proposed, the EPA says, the new standards would cut smog-producing chemicals by 80 percent, cut down on particulate matter by 70 percent, and reduce vapor emissions to near zero.

In the case of sulfur, one culprit in producing smog, the new standard would cut the emission to 10 parts per million in 2017 compared with the current standard of 30 parts per million. Only eight years ago the standard was 300 parts per million.

Implementing the new standards will, by 2030, avoid 2,400 premature deaths per year, 23,000 cases of respiratory ailments in children, 3,200 hospital admissions, and 1.8 million lost school days, work days, and days when activities would be restricted due to air pollution, the EPA estimates. …