Shifting away from MTBE additive
Driving remains heavy with demand for gasoline expected to be steady this summer, analysts said.
And refineries are moving away from using MTBE, the gasoline additive that has been used in much of the country to help curtail air pollution, but which also has been found to contaminate drinking water supplies.
Three of the biggest refiners — Valero Energy Corp., Exxon Mobil Corp. and Shell Oil Co. — said they will stop putting MTBE into gasoline beginning May 5. Valero estimates that will shrink the nation's gasoline supply by 145,000 barrels a day.
The oil industry has cited the shift away from MTBE as a major reason for gasoline price increases.
"The government is phasing out that chemical compound in gasoline and replacing it, in many cases, with the corn-based additive ethanol," Beach said. "And there's some concern that there may not be enough ethanol to meet that demand, which only aggravates the price situation."
At a congressional hearing last month, Guy Caruso, head of the government's Energy Information Administration, said about 130,000 barrels of ethanol will be needed. That's about 50 percent of current output.
The demand for more ethanol has caused its price to surge about 50 cents, to $2.75 a gallon.
The additives account for about 10 percent of gasoline volume in areas where they are used, so a 50-cent increase in ethanol translates into about a nickel a gallon boost in the fuel's cost to motorists.
Last year, Congress, as part of broad energy legislation, lifted the requirement that refiners include 2 percent oxygenate — MTBE or ethanol — in gasoline sold in areas having clean air problems, clearing the way for refiners to stop using MTBE.
Driving remains heavy with demand for gasoline expected to be steady this summer, analysts said.
And refineries are moving away from using MTBE, the gasoline additive that has been used in much of the country to help curtail air pollution, but which also has been found to contaminate drinking water supplies.
Three of the biggest refiners — Valero Energy Corp., Exxon Mobil Corp. and Shell Oil Co. — said they will stop putting MTBE into gasoline beginning May 5. Valero estimates that will shrink the nation's gasoline supply by 145,000 barrels a day.
The oil industry has cited the shift away from MTBE as a major reason for gasoline price increases.
"The government is phasing out that chemical compound in gasoline and replacing it, in many cases, with the corn-based additive ethanol," Beach said. "And there's some concern that there may not be enough ethanol to meet that demand, which only aggravates the price situation."
At a congressional hearing last month, Guy Caruso, head of the government's Energy Information Administration, said about 130,000 barrels of ethanol will be needed. That's about 50 percent of current output.
The demand for more ethanol has caused its price to surge about 50 cents, to $2.75 a gallon.
The additives account for about 10 percent of gasoline volume in areas where they are used, so a 50-cent increase in ethanol translates into about a nickel a gallon boost in the fuel's cost to motorists.
Last year, Congress, as part of broad energy legislation, lifted the requirement that refiners include 2 percent oxygenate — MTBE or ethanol — in gasoline sold in areas having clean air problems, clearing the way for refiners to stop using MTBE.
