(An unsolicited post written for sustainablog.)

Now the EPA and the enviromentalists will be to blame in 2006 for the high cost of gasoline:

Reuters:

NEW YORK (Reuters) - U.S. consumers recovering from record high gasoline costs last summer may now face a nearly 60-cent price surge next year because of stricter environmental regulations, an industry expert said.

The introduction of lower sulfur requirements for gasoline and diesel combined with a shift in gasoline additives could reduce supplies and create problems for refiners trying to produce fuel to meet the new specifications, according to analyst Trilby Lundberg.

"We expect 2006's price surge to be less severe than 2005's, but more severe than any other year on record," Lundberg said in a report. "While we don't expect retail gasoline to revisit the $3 level in 2006, we do expect a 57 cent hike by July."

[snip]

But starting January 1, refiners will begin cutting sulfur content in gasoline according to regulations from the U.S. Environmental Protection Agency (EPA). This will be followed by the gradual phasing in of ultra low sulfur diesel requirements beginning in June.

"This ratcheting down of allowable sulfur adds to costs and also strains the refining system," Lundberg said. "In 2006, the EPA could well cost gasoline consumers more than Hurricane Katrina did."

Now from the horses mouth - The EPA website:

What are the Benefits and Costs of this Program?

Vehicles meeting the Tier 2 emission standards are much cleaner – 77% to 95% cleaner, depending on the size of the vehicle – compared with model year 2003 and earlier. The new standards also reduce the sulfur content of gasoline by up to 90 percent. The significant health and environmental benefits of the program are estimated to total more than $25 billion at a cost to consumers of between only $70 to $250 per vehicle, and these large benefits are costing only about a penny a gallon today, and will still cost less than 2 cents per gallon when the program is fully phased in, in 2006.

A little research shows that this Tier 2 program was finalized in 1999. Refineries will have had 7 years to prepare and adapt to this change. It is shocking how something expected to cost 2 cents per gallon by the government, translates into a projected 57 cent per gallon increase due to shortfalls in refining capcity.

Big Oil will push the American consumer to believe that environmental restrictions placed on them are too strict and are costing the average citizen at the pump. Undoubtedly there will be pressure placed on law makers to "ease sulfur content limitations in gasoline", or to reduce the "red tape and bureaucracy" that supposedly is preventing more refineries to be built. (The pesky red tape that protects American citizens and their descendants from soil, air and water contamination. See MTBE.)

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