MTBE Extends Gasoline Supplies & Prevents Fuel Price Increases
The cleaner-burning gasoline additive Metyl Tertiary-Butyl Ether (MTBE) is an integral component of the nations gasoline supply and has been vital in helping to minimize gasoline supply shortages. With current U.S. crude oil imports exceeding 50% of overall demand and U.S. refineries operating at full capacity, there is no margin for error with regard to gasoline supply. Banning or reducing the use of MTBE would further tighten gasoline supplies and substantially impact gasoline prices for consumers.
- MTBE extends U.S. gasoline supplies Up to 15 volume percent can be blended into finished gasoline. It is particularly valuable during refinery outages and distribution system disturbances when additional supplies are needed most.
- MTBE use comprises over 4 volume percent of the overall U.S. gasoline pool; and in certain areas makes up over 10 volume percent of gasoline supply.
- DOE estimates total U.S. gasoline production above 95% capacity. Any supply disruption or alterations would have serious gasoline supply impacts.
- DOE concludes that removing MTBE from commerce will effectively reduce domestic gasoline supply by 550,000 barrels/day or roughly 6.8% of the total daily consumption of gasoline.
- According to DOE, MTBE use is equivalent to gasoline production from five U.S. refineries.
- MTBE is cost effective choice of refiners 85% of RFG is blended with MTBE.
- MTBE is a growing component of the nations fuel supply, even in areas that have taken very aggressive action against the chemical. Record MTBE use has been reported in California during the past two summers.
- Because MTBE is mainly produced from natural gas, it reduces dependence on foreign oil and is less susceptible to supply shocks. DOE reports that MTBE use makes up 71 percent of the alternative fuel use requirements contained in the Energy Policy Act of 1992.
A number of studies indicate that removing MTBE will significantly increase the cost of producing gasoline, further compounding any cost increases anticipated as a result of gasoline supply shortfalls, and substantially increasing gasoline prices for the consuming public:
- The California Energy Commission describes an immediate MTBE phaseout as catastrophic. CEC estimates the refiner cost of phasing out MTBE (in California only) to be at least 5 to 7 cents/gallon. California cost estimates are 10 to 20 cents/gallon for accelerated MTBE removal.
- Turner Mason & Company estimated a national MTBE phaseout cost of about 4 to 8 cents/gallon without controls against air quality backsliding.
- MathPro Inc. estimates national MTBE phaseout cost of about 4 to 6 cents/gallon above cost of California-only ban even with extensive air quality backsliding.
- DOE estimates the cost of removing MTBE at about 2.5 to 7 cents/gallon (with RFG areas having an additional substantial price increase).
- DOE informally estimated the cost of replacing MTBE with ethanol in the Northeast to be 3 cents/gallon excluding significant investment costs and highway trust fund impacts.
- Californias conversion to ethanol will cost an additional 4 cents per gallon for each gallon of ethanol blended into gasoline.
Using conservative estimates, the overall annual refinery production costs following MTBEs removal from gasoline is estimated to be $3.6 to $10.0 billion. This estimate does not reflect the ultimate price increases consumers will see at gasoline retail stations.
It should be noted that the impact on the U.S. gasoline and energy outlook could be more pronounced as a result of unplanned refinery outages and distribution system disruptions. This too, will aggravate already tight energy supplies and leave U.S. consumers paying substantially higher prices for gasoline.