EPA officially lifts oxygenate requirement

By EPM Staff Writer Dave Nilles | May 01, 2006
April was especially busy for gasoline refiners. The month was spent readying for summer-blend gasoline and a May 5 deadline, which marked the day oil refiners have been preparing for since the passage of the Energy Policy Act of 2005. The U.S. EPA lifted the oxygenate requirement for reformulated gasoline, allowing refiners to produce gasoline without an oxygenate, provided that gasoline continues to meet Clean Air Act standards. Oxygenates, such as ethanol or MTBE, are added to reformulated gasoline to make the fuel burn cleaner and produce fewer tailpipe emissions.

The Energy Policy Act required the EPA to remove the reformulated gasoline (RFG) 2 percent oxygen requirement. It took effect with its publication in the Federal Register.

"Since passage of the Clean Air Act of 1990, gasoline refiners have long sought the removal of the oxygenate requirement, claiming they could make a gasoline that would be just as clean without the added oxygen," Renewable Fuels Association President Bob Dinneen said. "Beginning today, refiners now have that flexibility. Still, virtually all reformulated gasoline in the United States will contain ethanol because it remains a very valuable component in gasoline."

Al Mannato, fuel issues manager with the American Petroleum Institute, said several issues came to a head this spring. First, refiners began voluntarily moving from MTBE to ethanol. Twenty-six states currently have MTBE bans on the books. The timing of the oxygenate removal was also critical. Mannato said the oxygenate mandate was in place until May 1, when refiners were required to begin producing summer-blend gasoline. Retail stations must be compliant by June 1. The oxygenate requirement was lifted May 5, allowing blender to discontinue ethanol use. However, once refiners are summer-blend compliant, the EPA won't allow them to move to oxygenate-free gasoline, according to Mannato. "We're locked into that strategy until Sept. 15," he said. That is when winter-blend gasoline can start being produced again.

Despite the oxygenate removal, Dinneen and Mannato agree refiners aren't likely to stop using ethanol. "Given the [renewable fuels standard] and increasing mandates, it's not likely that many refiners or markets will move away from ethanol even as we move into a winter blend," Mannato said.

While the initial switch to ethanol-blended gasoline wasn't entirely smooth, Mannato pointed out that some refiners have publicly stated they have enough ethanol. Some of the well-publicized gasoline shortages in the Northeast were caused in part by the annual transition from winter-blend gasoline to summer blend. Many refiners were running their storage tanks low to prepare for summer-blend gasoline. When ethanol-blended gasoline didn't arrive in time, there were sporadic outages. "These shortages were limited in scope," Mannato said.

It now appears that refiners have everything in place to continue using ethanol. "Refiners' continued and increased use of ethanol tells us two things: It is the cheapest option available to refiners, and supplies are sufficient to meet demand," Dinneen said.

The EPA estimates that RFG reduces emissions of ozone-forming pollutants by 105,000 tons annually, the equivalent of eliminating the ozone pollution from 16 million cars. RFG also eliminates toxic pollutants by approximately 24,000 tons per year.