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Page added on March 29, 2013

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US petrol rules to push fuel costs higher

Public Policy

The US Environmental Protection Agency has proposed new standards to cut pollution from road fuel that have been strongly opposed by the oil industry but backed by carmakers.

The new rules to reduce the sulphur content of petrol, known as Tier 3, are intended to cut cars’ emissions of pollutants that create smog and cause breathing problems.

The American Petroleum Institute, the oil industry group, argues that they will add up to 9 cents to the cost of producing a gallon of petrol, pushing up prices at a time when fuel costs have already been rising, and are facing upward pressure from other environmental regulations.

The EPA rejects that analysis, however, saying that on average the new rules will add only about 1 cent per gallon to refiners’ costs.

The rules will bring the US into line with standards that have already been adopted in the European Union and Japan, as well as the state of California.

Bob Perciasepe, the EPA’s acting administrator pending the confirmation of Gina McCarthy, President Barack Obama’s nominee, said the new rules were “another example of how we can protect the environment and public health in an affordable and practical way.”

Sulphur in petrol reduces the effectiveness of catalytic converters that cut emissions such as nitrogen oxides and hydrocarbons, which create smog. So a lower sulphur content will mean lower emissions and less smog.

The EPA estimates the rules will by 2030 save 2,400 lives per year, and prevent 23,000 cases per year of respiratory ailments in children.

The fuel standards are accompanied by new requirements for cars, which the EPA estimates will add $130 to the cost of an average vehicle by 2025.

The car industry has supported the planned fuel standards because they will make it easier for it to meet its emissions requirements. Bringing the rest of the US into line with California’s standards means they will be able to sell the same vehicles anywhere in the country.

Global Automakers, an industry group representing international manufacturers such as Toyota, Honda, Kia and Hyundai, said it was “pleased” with the EPA announcement.

Michael Stanton, the group’s president, said: “Automakers need predictable national fuel quality at the retail pump.”

However, the American Fuel & Petrochemical Manufacturers, a group that represents refiners, said the EPA’s decision to move forward with the new rules was “completely without merit”.

Charles Drevna, AFPM president, said the EPA had not published any cost-benefit analysis to justify the new rule, which he said would cost the refining industry $10bn in infrastructure investment and an extra $2.4bn a year in operating costs.

”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,” he said.

The new standard sets a limit for the sulphur content of petrol of 10 parts per million by 2017, down from 30 ppm today, a level that is already much lower than the 300 ppm average for US petrol in 2004.

FT



4 Comments on "US petrol rules to push fuel costs higher"

  1. GregT on Sat, 30th Mar 2013 12:31 am 

    The EPA estimates the rules will by 2030 save 2,400 lives per year, and prevent 23,000 cases per year of respiratory ailments in children.

    I wonder, how many people will die from Climate Change by 2030?

  2. BillT on Sat, 30th Mar 2013 2:23 am 

    GregT, you are giving the sheeple too many things to worry about. The gas price increase is all they care about. Most don’t believe in Climate Change or even know what it is.

    Why 4 years to phase in the change? Seems that one year would have been plenty. And if it adds $1 to the cost, great! That will cut the emissions even more as less will be burned.

  3. rollin on Sat, 30th Mar 2013 3:52 am 

    Of course FT forgets to mention the mpg gain from this process. Refineries already remove sulfur as part of their process. If only they would do this for coal.

  4. DC on Sat, 30th Mar 2013 5:59 am 

    Q/The American Petroleum Institute, the oil industry group, argues that they will add up to 9 cents to the cost of producing a gallon of petrol, pushing up prices

    And this really matters because as we all know, API #1 concern is to keep its heavily subsidized members costs high and profits low, or is it costs low and profits high? Anyhow, its pretty clear that 9 cents(maybe) is a real deal breaker for the oily US energy cartel because we all know if there is one thing US Oil corporations are loathe to do, its pass higher costs onto to consumers and society as a whole. Im sure most oil executives would rather take a pay cut than pass costs along to ‘motorists’.

    But really at the end of the day, what API is really saying is…..

    “We cant makes our fuels marginally less dirty because that would be bad for the economy”.

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