US to relax Midwest gasoline rules to avoid price spike : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

US to relax Midwest gasoline rules to avoid price spike Updated 1:59 PM ET March 16, 2001 By Tom Doggett

WASHINGTON (Reuters) - The Bush administration said Friday it would relax pollution rules which will allow more corn-based ethanol to be blended into gasoline in Chicago and Milwaukee, to avoid a spike in fuel prices during the summer driving season.

Christine Todd Whitman, administrator of the Environmental Protection Agency, told Reuters she would notify refiners on Monday that they can begin making cleaner-burning summer gasoline with the relaxed standards.

Using more of the cheaper government subsidized ethanol will bring down the cost of blending gasoline.

The rule will be finalized by the end of next week, she said in a brief interview following a speech at a National Governors Association meeting.

"The letter we are sending gives them (refiners) the authority to go ahead," Whitman said.

Gasoline prices in Milwaukee and Chicago soared as high as $2.75 a gallon last summer because of supply problems and the high costs of blending the fuel. The high prices sparked consumer outrage, congressional hearings and a federal antitrust investigation.

While Whitman could not provide an estimate of how much consumers would save at the pump, she said the EPA's policy change "certainly should stabilize prices and keep them from having the kind of spike that you saw last summer."

The EPA's action means gasoline sold in the two cities can temporarily contain larger amounts of pollutants known as volatile organic compounds (VOCs) which are released when ethanol is used.

When added to gasoline, ethanol increase the evaporation rate of fuel, causing more VOC emissions, but ethanol reduces carbon monoxide emissions. Both pollutants play a role in ozone formation.

The VOC standard would be raised to 0.3 pounds per square inch Reid vapor pressure -- which measures the volatility of fuel -- from the current 0.2 pounds.

The Renewable Fuels Association, which represents U.S. ethanol makers, applauded the action and urged the same relaxed standards for St. Louis, Lousville and Cincinnati. Roughly half of gasoline supplies in those three cities are blended with ethanol, the trade group said.

"Farmers across the country will benefit from this effort to fully recognize the impact of carbon monoxide (tailpipe emissions) on ozone formation and ethanol's full air quality benefits," said Eric Vaughn, president of the pro-ethanol trade group.

Whitman, however, said the EPA will not extend the relaxed standards to other areas because Chicago and Milwaukee are the only major cities that depend exclusively on ethanol-blended gasoline.

The EPA requires most major U.S. cities to use cleaner-burning gasoline during the hot summer months to reduce smog and air pollution. Illinois and Wisconsin refiners typically blend ethanol with a special kind of highly refined gasoline to achieve the stricter standards.

Whitman provided details of the relaxed standards on Thursday in a meeting with House of Representatives Speaker Dennis Hastert, an Illinois Republican, and other lawmakers from Illinois and Wisconsin.

-- Martin Thompson (, March 17, 2001

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