An oil industry study says the proposed rule being unveiled Friday by the administration could increase gasoline prices by 6 cents to 9 cents a gallon. The Environmental Protection Agency estimates an increase of less than a penny and an additional $130 to the cost of a vehicle in 2025.
The EPA is quick to add that the change aimed at cleaning up gasoline and automobile emissions would yield billions of dollars in health benefits by 2030 by slashing smog- and soot-forming pollution. Still, the oil industry, Republicans and some Democrats have pressed the EPA to delay the rule, citing higher costs.
Environmentalists hailed the proposal as potentially the most significant in President Barack Obama’s second term.
The so-called Tier 3 standards would reduce sulfur in gasoline by more than 60 percent and reduce nitrogen oxides by 80 percent, by expanding across the country a standard already in place in California. For states, the regulation would make it easier to comply with health-based standards for the main ingredient in smog and soot. For automakers, the regulation allows them to sell the same autos in all 50 states.
The Obama administration already has moved to clean up motor vehicles by adopting rules that will double fuel efficiency and putting in place the first standards to reduce the pollution from cars and trucks blamed for global warming.
“We know of no other air pollution control strategy that can achieve such substantial, cost-effective and immediate emission reductions,” said Bill Becker, executive director of the National Association of Clean Air Agencies. Becker said the rule would reduce pollution equal to taking 33 million cars off the road.
But the head of American Fuel and Petrochemical Manufacturers, Charles Drevna, said in an interview Thursday that the refiners’ group was still unclear on the motives behind the agency’s regulation, since refining companies already have spent $10 billion to reduce sulfur by 90 percent. The additional cuts, while smaller, will cost just as much, Drevna said, and the energy needed for the additional refining actually could increase carbon pollution by 1 percent to 2 percent.
“I haven’t seen an EPA rule on fuels that has come out since 1995 that hasn’t said it would cost only a penny or two more,” Drevna said.
A study commissioned by the American Petroleum Institute estimated that lowering the sulfur in gasoline would add 6 cents to 9 cents a gallon to refiners’ manufacturing costs, an increase that likely would be passed on to consumers at the pump. The EPA estimate of less than 1 cent is also an additional manufacturing cost and likely to be passed on.
A senior administration official said Thursday that only 16 of 111 refineries would need to invest in major equipment to meet the new standards, which could be final by the end of this year. Of the remaining refineries, 29 already are meeting the standards because they are selling cleaner fuel in California or other countries, and 66 would have to make modifications.
The official spoke on condition of anonymity because the rule was still undergoing White House budget office review.