SAN FRANCISCO – The state has until the end of the year to remove the additive MTBE from gasoline and replace it from ethanol, but officials worry that they won’t meet the deadline and that that could drive up gas prices.
The delay could also prove troublesome for Gov. Gray Davis.
In early 1999, Davis declared MTBE a threat because studies showed it was leaking into the state’s groundwater.
He ordered the fuel additive that makes gasoline burn cleaner to be banned by Dec. 31, 2002, in favor of another federally mandated gasoline additive, ethanol, which is made from corn, primarily in the Midwest.
But three years later, MTBE is still in use in the state’s reformulated gasoline and Davis’ options are narrowing.
“This is a ticking bomb,” Bruce Cain, a political scientist at the University of California at Berkeley told the San Francisco Chronicle. Cain said the gasoline additive problem has parallels to last year’s energy crisis.
Davis faces several infrastructure obstacles to getting ethanol-based fuel in California.
Last year, U.S. ethanol production, located almost exclusively in the Midwest states such as Iowa, was more than 1.8 billion gallons. California will need nearly 950 million gallons a year, requiring a production increase.
That increase would necessitate production and transportation upgrades for the ethanol plants, which are behind schedule in making those changes. It also requires an estimated $100 million in new equipment and refineries in California.
A lack of rail transport could also contribute to supply problems, making gasoline prices rise as much as 50 cents a gallon.
“California’s gasoline infrastructure is incredibly complicated, with so many different pieces that have to come together seamlessly for it to work,” said Scott Folwarkow, director of regulatory affairs for independent refiner Valero Energy Corp. “If one part isn’t ready, the price impacts can be huge.”
Davis’ options include asking for the MTBE phase-out deadline to be pushed back further until infrastructure is ready for ethanol or sticking to the deadline and running the risk of offending California motorists and voters if gas prices soared.
Or he can wait to see whether Congress passes a compromise measure that would let him waive an oxygenate requirement, allowing states some oversight on how much fuel additives they use.
Under the measure, Congress would set a minimum amount of ethanol that refiners have to purchase each year. The compromise attached to an energy bill could satisfy the corn lobby and individual states.