Report: Boutique fuels do not raise gas prices

A draft Environmental Protection Agency (EPA) report contradicts President Bush’s suggestion that boutique fuels, designed to cut pollution from cars and trucks, have contributed to higher gasoline prices.

A draft Environmental Protection Agency (EPA) report contradicts President Bush’s suggestion that boutique fuels, designed to cut pollution from cars and trucks, have contributed to higher gasoline prices.

While they could complicate gasoline distribution when a hurricane or pipeline rupture disrupts supplies, the various fuel types used by states have provided “significant, cost-effective air-quality improvements,” the report states.

The report was written by state and federal officials who were brought together at the direction of the president as he searched for solutions to high gasoline prices, which spiked to over $3 a gallon in the spring.

It was in that context that Bush gave a speech to the Renewable Fuels Association in which he said boutique fuels were one reason for the price increases.

“When you have an uncoordinated, overly complex set of fuel rules, it tends to cause prices to go up,” Bush said. The president also called for wider use of alternative fuels and for high mileage standards for cars.

House Republicans also pointed to boutique fuels as a contributor to supply problems. Energy and Commerce Committee Chairman Joe Barton (Texas) introduced a bill to limit the number of boutique fuels, but he backed off after industry and government officials expressed doubts that the fuel types were a major contributor to the price increase.

“[The bill] went from something I was ready to mark up the next week to wait and see,” Barton said after the hearing.

Boutique fuels are used principally in urban areas to reduce levels of ozone, which can trigger respiratory ailments and is a particular problem during the summer. The fuels are less volatile, which reduces exhaust and evaporative emissions.

States, in cooperation with local refineries, can use boutique fuels to cut pollution instead of the federally imposed reformulated gasoline, which often relies on corn-based ethanol or methyl-tertiary butyl ether, or MTBE.

Boutique fuels now account for 10-15 percent of the nation’s fuel supply.

Bob Slaughter, president of the National Petrochemical and Refiners Association, said at the Energy and Commerce Committee hearing on gasoline prices in May that reducing boutique fuels “may not provide the supply relief that many advocates think” and could be counterproductive.

Red Cavaney, president and CEO of the American Petroleum Institute, added during the same hearing that boutique fuels were “not principally responsible” for the higher gasoline prices. But he said the fuels have created an “inflexible fuel system” and “contribute to the tight supplies and price volatility so decried by customers.”

The task force said some industry representatives suggested a potential link between boutique fuels and supply or price concerns.

But the task force’s draft report added that the information was “not supported by any documentation and EPA’s review did not reveal any studies or empirical data confirming that boutique fuels presently contribute to higher fuel prices or present unusual distribution problems.”

In the Energy Policy Act passed last year, Congress prohibited EPA from allowing the number of boutique fuels in use to increase.

Environmentalists said the draft report should be a warning to government officials not to pass further reductions.

“It would be a dumb mistake to further limit state authority to adopt clean fuels without some way of compensating for possible pollution problems,” said Frank O’Donnell of Clean Air Watch.

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