Tuesday, July 1, 2008

Reformulated Gas, Improving the Environment or Waste of Money?

In the US Midwest, gasoline was required to be reformulated, based on regions and their air quality conditions, under the 1995 Federal Clean Air Act. "Boutique blends" were created with the purpose of reducing ozone. Understandably, any time a standard product is customized, it increases its cost, and with these boutique blends are definitely more expensive, $0.14 more per gallon to be precise.

The Milwaukee Journal Standard posted an article on June 30 titled, "Some experts question benefits of reformulated gas, Wisconsin asks EPA to eliminate special fuel requirement," detailing the local experience with these blends.

The first point of the article is that the EPA hasn't been able to measure the effect of the reformulated gas as several other factors have changed. Automobiles now have better emissions systems, making them ULEV (ultra-low emission vehicles), as well as cleaner burning, non-formulated gasoline. As US fuel standards become more strict, the value of reformulated gasoline declines.

It should be clear to any consumer, as well as government regulators that with sweeping changes, cost-benefit analysis needs to be performed to insure the highest benefits are achieved at the least cost.

US Representative Paul Ryan (R-Janesville), says it best:

"Wisconsin is being needlessly penalized, ... Reformulated gas is an economic burden on motorists because a limited number of refiners are producing it and it's only being sold in specific markets, ... The current system basically sets up a system for high prices," Ryan said. From Green Bay to St. Louis, there are five different blends of fuels. That makes absolutely no sense.'"

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