API: EPA Tier 3 Proposal Threatens Economy, Energy Security

Vapor pressure reductions could also add 16 cents to gallon of gasoline

WASHINGTON -- The U.S. Environmental Protection Agency (EPA) should follow standard Clean Air Act procedures in proposing its new and "potentially massively costly" Tier 3 sulfur standards, American Petroleum Institute (API) senior downstream policy advisor Patrick Kelley told reporters on Tuesday. He said the rule could significantly affect gasoline costs and would come at a time when a wave of other regulations affecting refineries also could be imposed.

He also said the proposal could damage U.S. energy security.

"Respecting the statutory rulemaking process in this case is particularly important because the proposal is hard to justify and potentially very harmful. The massive refinery investments it would require could drive up the cost of making gasoline and weaken the nation's energy security without producing much, if any, environmental benefit. Most sulfur in gasoline has already been removed. There's 90% less in gasoline today than a decade ago, and the current Tier 2 standards are still generating environmental benefits as the U.S. vehicle fleet turns over," he said.

"Unfortunately, Tier 3 is not the only rule EPA has in mind for our nation's refineries. EPA also is considering gasoline vapor pressure reductions, which could increase gasoline costs an additional 16 cents per gallon beyond the Tier 3 costs, and increasingly burdensome RFS requirements, which, according to NERA Economic Consulting, could increase gasoline costs by 30% and result in rationing and other serious disruptions in the transportation sector and severe economic damage," said Kelley.

"On top of that, other regulations affecting refineries--rules whose costs have not yet been fully analyzed--could add substantially to this burden," he added. "They include greenhouse gas rules, new source performance standards, and more stringent ozone standards. As the studies show, this is a recipe for disaster for American consumers."

API submitted comments on the Tier 3 rule to the EPA.