Today's hearing will address the proposed sulfur diesel regulations from EPA. Yesterday I ended my opening statement during the ethanol hearing with the comment that when it comes to fuel prices, EPA is behaving like a child who ate an entire cake, they don't regret eating the cake, but they are awfully upset that they have a stomachache.
For some reason the EPA is shocked and surprised that fuel prices are spiking in the Midwest because of the introduction of the new RFG phase 2 regulations. The trouble is the EPA continues to roll out new restrictions and regulations on gasoline and gasoline formulas without any regard to what the consequences are to the consumer. I have a chart the shows just a few of the recent regulations. [SHOW CHART], such as the Tier Two, RFG 2, the Administration's ethanol proposal, and many others. These regulations are one of the main reasons for the price spikes that we are seeing in fuel costs. Today's sulfur diesel regulation is a perfect example. This is a regulation which will cause price spikes for fuel over the next ten years, and EPA has done a miserable job in predicting the consequences of this regulation. I believe there will be severe shortages of diesel fuel which will lead to higher prices for truckers, farmers ,and the home heating market. It is highly likely that instead of installing the expensive desulfurization equipment many companies will choose to export their diesel instead of selling in the U.S., creating greater shortages.
The real shame in this is that it could be avoided if the EPA were more reasonable in their expectations. Instead of calling for a 97% reduction in sulfur, they could have taken a 90% reduction in sulfur which would have produced the same benefits for particulate matter at half the cost. While it is true that NOx would only be reduced by 75% instead of 95%. I think we need to stop and look at it, 75% reduction at half the cost is a bargain. Once again the EPA appears bent on chasing pennies of benefits for dollars of costs.
On a final note, last year during the sulfur in gasoline debate the refiners were pretty much split on the issue. The large companies didn't mind, and in fact may have seen a competitive advantage against the smaller companies. Today, almost without exception, all Refiners are telling me that this proposed rule is just not feasible. I hope the EPA is listening.
In addition to today's hearing, over the next few months, my Subcommittee will be looking even more closely at the cost of EPA's programs on our nation's fuel supply. I really think the lasting legacy of Carol Browner might very well end up being these gasoline price spikes over the next ten years, unless something is done to restore some sanity to this process.