Motor Gasoline Outlook and State MTBE Bans

Tancred Lidderdale

Contents

1. Summary
2. MTBE Supply and Demand
3. Ethanol Supply
4. Gasoline Supply
5. Gasoline Prices
1. Long-Term Equilibrium Price Analysis
2. Short-Term Price Volatility
6. Conclusion
7. Appendix A. Estimating MTBE Consumption by State
8. Appendix B. MTBE Imports and Exports
9. Appendix C. Glossary of Terms
10. End Notes
11. References

1. Summary

The U.S. is beginning the summer 2003 driving season with lower gasoline inventories and higher prices than last year. Recovery from this tight gasoline market could be made more difficult by impending State bans on the blending of methyl tertiary butyl ether (MTBE) into gasoline that are scheduled to begin later this year.

Three impending State bans on MTBE blending could significantly affect gasoline markets this year. The Connecticut ban takes effect on Oct. 1, 2003, while California and New York bans follow on Jan. 1, 2004 (Connecticut may delay its ban until Jan. 1, 2004, see End Note 1). It is the California ban that presents the most immediate concern. Because the original date of the California ban was Jan. 1, 2003, several California refiners are phasing out MTBE in favor of ethanol in advance of the new deadline (End Note 2). Once facilities and systems have switched from MTBE to ethanol it is generally not possible to quickly revert back (End Note 3). This paper reviews the supply and price issues relating to MTBE bans with a particular focus on California.

Several years ago MTBE was detected in water supplies scattered throughout the country, but predominantly in areas using reformulated gasoline (RFG) (End Note 4). MTBE has apparently been making its way from leaking underground storage tanks, gasoline spills, and two-stroke gasoline engines into surface and ground water. (For more information refer to the Environmental Protection Agency web site on MTBE at http://www.epa.gov/mtbe/.) Concerns over drinking water quality have prompted 16 States and Reno, Nevada to enact legislation to restrict or prohibit the use of MTBE in gasoline.

Removal of MTBE from the gasoline pool requires not only the replacement of the lost volume but also the oxygen content, octane, and emissions-reducing properties it provides to RFG. The only oxygenate replacement that is currently considered is fuel ethanol. Although fuel ethanol has a high blending road octane value of 115 compared with 110 for MTBE (Meridian Corp., 1991), two qualities detract from its use:

1. Ethanol increases the vapor pressure (Rvp) of gasoline while MTBE has only a small effect. Because ethanol increases the vapor pressure of gasoline, low cost high vapor pressure components such as butane and pentanes must be removed from the RFG pool, which makes it more difficult and costly to produce RFG.

2. Ethanol tends to separate from gasoline if stored for an extended period of time, and if an ethanol-gasoline blend is exposed to water or water vapor (as in a pipeline), the ethanol tends to bring the water into solution and the gasoline may be rendered unusable (Environmental Protection Agency, 1996). Because of these handling problems, ethanol is shipped separately from gasoline (typically by rail car or truck but not in pipelines) and is blended with the gasoline at the distribution terminal.

2. MTBE Supply and Demand

The blending of MTBE into motor gasoline has increased dramatically since it was first produced over 20 years ago. MTBE usage grew in the early 1980's in response to octane demand resulting initially from the phaseout of lead from gasoline and later from rising demand for premium gasoline. The oxygenated gasoline program, which began in November 1992, stimulated an increase in MTBE production from 83,000 barrels per day in 1990 to 161,000 barrels per day in 1994. The RFG program, which began in January 1995, provided a further boost to oxygenate blending. MTBE demand increased to 266,000 barrels per day by 1997.

MTBE supply and demand balances in Table 1 show that during the first few years of the Federal RFG program almost all of the MTBE consumed in the Nation was in RFG and oxygenated gasoline. Over the last few years it appears that MTBE has found its way back into the conventional gasoline pool as an octane blending component.

State bans on MTBE use could further stimulate MTBE blending into conventional gasoline for use in States without MTBE bans. It is possible that MTBE displaced from RFG in States that have implemented bans must be replaced by another clean, high octane, and low vapor pressure blendstock such as alkylate. The use of MTBE in conventional gasoline could free up alkylate. Also the decline in MTBE demand arising from the State bans could depress the market price of MTBE such that it becomes economical to increase its use as an octane blendstock. However, the use of MTBE in conventional gasoline could also be constrained as the growing number of State bans makes it difficult to maintain separate pools of conventional gasoline with and without MTBE.

Only five State bans should have a significant direct effect on MTBE and gasoline markets: California, Connecticut, Kentucky, Missouri, and New York. The five States shown in Table 2 consume about 50 percent of the MTBE blended into RFG and oxygenated gasoline, and about 44 percent of all MTBE consumed in the U.S. (although this latter market share could be higher because we do not account for the volume of MTBE blended into conventional gasoline.)

The other 11 States plus Reno, Nevada, currently consume little or no MTBE. However, as noted above, the many State bans may also make it difficult to blend MTBE into the conventional gasoline pool since it may not be possible for some refiners and terminals to maintain separate pools of conventional gasoline with and without MTBE.

3. Ethanol Supply

The ethanol industry is expected to be able to meet the demand for ethanol in the States that have banned MTBE without adding a single plant beyond those currently being built (Energy Information Administration, 2002a). The Renewable Fuels Association (RFA), an ethanol industry trade group, maintains a list of ethanol producers, their plant sizes, and their feedstocks. Table 3 shows that the producers on the RFA list have existing capacity of 178 thousand barrels per day, with almost all of that capacity located in the Midwest (PADD 2).

The United States imports a small quantity of fuel ethanol as well. In 2002, an average 416 barrels per day were imported from Canada, and an average 422 barrels per day were imported from Costa Rica. One reason for the low level of imports is the tariff of $0.54 per gallon that applies to most imported fuel ethanol to offset the gasoline excise tax exemption for ethanol blended gasoline (U.S. International Trade Commission, 2003).

4. Gasoline Supply

The Federal RFG program requires a minimum 2.1 percent oxygen by weight when averaging. This minimum oxygen requirement can be satisfied by blending approximately 5.5 volume percent ethanol or 11 volume percent MTBE. RFG is generally blended with the minimum required volume of ethanol or MTBE to minimize costs. Consequently, replacing MTBE with ethanol will result in a reduction of RFG volume.

When MTBE is removed and ethanol is added to gasoline, the vapor pressure (Rvp) of the gasoline blend increases and thus emissions of volatile organic compound (VOC) increase. Table 4 shows that blending 5 volume percent ethanol into 9.0 Rvp gasoline increases the Rvp to 10.1 while blending 10 volume percent MTBE increases the gasoline Rvp from 9.0 to 9.2. Because of the Rvp boost with ethanol, conventional gasoline that contains 10 volume percent ethanol (commonly called "gasohol") and sold outside of reformulated gasoline control areas is allowed a 1 pound per square inch (psi) Rvp waiver. The Environmental Protection Agency also allowed the Chicago and Milwaukee RFG areas to reduce by 2.0 percentage points (equivalent to an increase in Rvp of approximately 0.3 psi) the summertime VOC performance standard applicable to RFG blends containing 10 volume percent ethanol (66 Federal Register 137).

To counter the increase in Rvp the gasoline blendstock that is to be combined with ethanol must be adjusted to a lower Rvp. This is accomplished by removing the light materials that boil at low temperatures and therefore have high Rvp's. These materials are generally lower cost C4 (e.g., butane) and C5 (e.g., pentane) hydrocarbons.

After C4's and C5's are reduced to achieve Rvp and 5.5 volume percent ethanol replaces 11 volume percent MTBE, the resulting distillation properties of the gasoline blend are different. The elimination of light, high-Rvp components in combination with a reduction in volume of oxygenates cause the T50 and T90 distillation temperatures for the gasoline blend to rise (the temperatures at which 50 percent and 90 percent of the gasoline boils off, respectively). These changes, in combination with less dilution of undesirable emission components, require further adjustments such as removing some of the heavier gasoline components from the base blend to meet emissions limits.

Thus, the shift to ethanol can result in a loss of volume in three ways:

• Less oxygenate volume (moving from 11 to 5.5 volume percent);
• Removal of light, high-Rvp volumes (C4's and C5's) to counter ethanol's higher Rvp; and
• Removal of heavy, high-boiling-temperature volumes to counter the loss of high-Rvp, low-boiling-temperature components and the net reduction in light oxygenate volume.

Several studies of the impact of MTBE bans on gasoline production volumes have been published. While the results of these studies vary because of different assumptions regarding the ability of refiners to adjust operations to make up for lost volume, they still reach the same conclusion that the loss of gasoline production capacity will be significant. For example, California refineries that produce only CARB (California Air Resources Board) RFG may see gasoline production fall by 10 to 17 percent (EIA, 2002b; Stillwater Assoc., 2002; and Stratco/Purvin & Gertz, 2000). The EIA (2002b) and Stillwater Assoc. (2002) cases are compared in Table 5.

Increasing the ethanol content from 5.8 to 10 volume percent to make up for some of the lost volume in California may not be an option. In EIA's study, ethanol could only be increased from 5.8 to 6.0 percent before the blend failed the CARB predictive model NO_x emission test (EIA, 2002b). It was possible to get to a 7.0 percent ethanol if the refiner can also purchase additional volumes of alkylate and iso-octane, but 10 volume percent was not practically achievable.

Refiners outside of California face an additional constraint in the Mobile Source Air Toxics Rule (MSAT) (End Note 5). The MSAT caps refiners at their average toxic emission level achieved in 1998-2000 to prevent "backsliding." The replacement of MTBE with ethanol contributes to an increase in toxics emissions, particularly acetaldehyde, which would require refiners to make further adjustments to their gasoline pool or possibly reduce their production of RFG (End Note 6).

5. Gasoline Prices

The State MTBE bans are expected to increase the cost of producing RFG and raise the pump price of gasoline. There are several factors contributing to this price increase:

• Capital investment required for transportation, storage, and blending of ethanol and ethanol-based RFG is passed on to consumers.

• Because ethanol increases the vapor pressure of gasoline, low-cost high vapor pressure components such as butane and pentanes must be removed from the RFG pool, which makes it more difficult and costly to produce RFG.

• Because approximately two gallons of MTBE are being replaced by one gallon of ethanol, the net volume loss must be made up for with some other high-octane blend component with low vapor pressure. Availability of desirable blending components such as alkylate and iso-octane is very limited.

Most estimates of higher pump prices with ethanol-blended RFG are based on long-term equilibrium models that assume sufficient lead-time for investments and perfect foresight for investors. In reality, some market participants may respond to uncertainty by delaying investment decisions, thereby creating the possibility of supply imbalance and price spikes during the MTBE phase-out. Moreover, as it becomes more difficult to produce gasoline with strict quality requirements, supply sources become fewer and more distant. Unexpected events such as refinery outages may result in larger and longer price spikes than have been seen in the past.

Both the long-term modeling estimates of higher pump prices and potential price spikes associated with short-term market disruptions are discussed in the following two sections.

Long-Term Equilibrium Price Analysis

The State MTBE bans are projected to increase the average price of RFG by 3.6 cents per gallon in 2004, with an increase in the average national motor gasoline price of 1.8 cents per gallon, compared to a reference case with no State MTBE bans (Energy Information Administration, 2002a). Although State-level projections are not available, it is generally expected that the increase in RFG prices in California, New York and Connecticut would be significantly higher than the national average. For example, the expected RFG price increase in PADD V, which is likely to use ethanol for all of its RFG by the end of 2004, is 9 cents per gallon. Table 6 shows the impact on RFG prices and the associated ethanol supply and RFG consumption at PADD levels.

Short-Term Price Volatility

Prices can also rise dramatically in the very short run when there is an unexpected supply reduction such as a refinery disruption, pipeline shutdown, river flooding, etc. Price increases lower demand and are also a signal to suppliers to increase production and also obtain product from nontraditional sources.

The magnitude and duration of a price rise resulting from a supply disruption depends on the availability of alternative sources of supply and methods of delivery. For example, a loss of refining capacity on the East Coast or shutdown of a pipeline delivering gasoline from Gulf Coast refineries to the East Coast generally has small and short-term effects on prices because there are well-established alternatives available out of the Gulf Coast and Europe. California, however, presents a unique problem.

California is a unique market with three characteristics that contribute to the volatile gasoline prices that have been observed over the past few years and that are likely to continue:

1. The West Coast market is isolated and has been self-sufficient;
2. West Coast refiners are unable to keep up with demand growth; and
3. CARB RFG product specifications are more restrictive than Federal RFG.

The West Coast gasoline market receives little if any supply from outside of the region. For example, in 2002, over 99 percent of the reformulated gasoline sold in PADD V was produced within the district (compared with 54 percent in PADD I). Any demand for supply outside of the West Coast must come from nontraditional sources.

Recent growth in gasoline demand on the West Coast has not been matched by new refining capacity in the region. Stillwater Associates (2002) suggest that "it is becoming increasingly difficult for refiners to expand capacity even by small increments because of restrictions imposed by their Clean Air Act Title V operating permits, and the costs of additional emission credits in the absence of feasible offsets. Moreover...the [recent] production gains in gasoline have come largely from additional conversion of heavier components, but the remaining production of residual fuels is approaching a point of diminishing returns." This implies that a disruption in production at a West Coast refinery cannot be readily made up from an increase in production at other refineries in the region.

Finally, because CARB RFG is more restrictive than Federal RFG sold elsewhere in the Nation, emergency supplies for the West Coast must come from nontraditional sources distant from the market that do not have CARB RFG in inventory or readily available. There is not only a transportation delay moving product from Asia, Canada, South America, or the U.S. Gulf Coast, but there would also be significant production delays.

We can see the increasing volatility of California gasoline prices in Figure 1. Beginning in early 1996, when the CARB RFG program began in California, price spikes have become larger and more frequent.

Figure 1. Spot Price Volatility of Los Angeles RFG
Source: Reuters

The MTBE ban in California may exacerbate gasoline price volatility. Meeting the CARB RFG specifications with ethanol rather than MTBE becomes more difficult for West Coast refiners and substitute supply from nontraditional sources may become more difficult to obtain. The Chicago market provides a good example of the potential increase in price volatility when MTBE is banned from gasoline. The Chicago market had effectively phased MTBE out of RFG by the end of 1998. Figure 2 shows that when the Federal Phase 2 RFG program (which required significant reductions in VOC emissions and gasoline Rvp) began in 2000, gasoline prices spiked at the start of the summer driving seasons in each of the following years.

Figure 2. Chicago Pipeline Spot Prices Versus U.S. Gulf Coast (USGC)
Note: RBOB is "reformulated gasoline blendstock for oxygenate blending" (see Appendix B, Glossary of Terms.)
Source: DRI/McGraw-Hill, Platt's Oilgram Price Report, Price Average Supplement (New York, NY), various issues 1999 - 2002.

6. Conclusion

The summer 2003 driving season may provide a hint of the challenges the petroleum industry will face over the next few years. MTBE is being banned by several States because of concerns over water quality. The cost of producing gasoline without MTBE is expected to rise by a small amount. As MTBE bans are implemented, the difficulty of producing RFG using ethanol to satisfy the required minimum oxygen content may contribute to temporary supply-demand imbalances and greater gasoline price volatility.

7. Appendix A. Estimating MTBE Consumption by State

The calculation of MTBE consumption by State is based on the following general procedures for reformulated gasoline and oxygenated gasoline.

Reformulated Gasoline

1. We start with the Environmental Protection Agency's quality surveys of reformulated gasoline sold in each control area (EPA, Information on Reformulated Gasoline (RFG) Properties and Emissions Performance by Area and Season). The Federal RFG compliance program requires each control area to take random RFG samples for analysis. The EPA reports the results of the chemical analyses as well as estimated emissions. Averages of the MTBE concentration in the RFG during the summer and winter are used to calculate the volume of MTBE sold in each State. Differentiating between summer and winter gasoline is important because oxygenate concentrations can be higher during the winter in some control areas because of Oxygenated Gasoline programs, which require 2.7 percent oxygen by weight as compared with the RFG program's 2.1 percent oxygen by weight (when averaging). Also, the use of ethanol may be higher during the winter versus the summer because of the relaxed gasoline vapor pressure restrictions.

2. MTBE concentrations in reformulated gasoline are reported in percent by weight and must be converted to percent by volume according to the formula:

Volume % oxygenate = weight % oxygenate x (density gasoline blend / density oxygenate)

For example, because MTBE is slightly heavier than gasoline during the winter, 10 weight percent MTBE will represent a slightly smaller volume percentage. The specific gravity of MTBE is 0.744 (or 6.19 pounds per gallon). The specific gravity of summertime gasoline is assumed to be 0.750 (or 6.24 pounds per gallon), and the specific gravity of winter gasoline is about 0.735 (6.12 pounds per gallon). The correction factor is the ratio of the specific gravity (or density) of gasoline to the specific gravity (or density) of MTBE. Thus, the MTBE weight-to-volume percentage correction factors are 1.0081 during the summer (0.750/0.744) and 0.9879 in the winter (0.735/0.744).

3. Since reformulated gasoline sales data are available only at the State level, MTBE concentrations reported for States with more than one control area are averaged using population weights. This implicitly assumes the mileage driven per capita and the average automobile fuel efficiency do not vary significantly across control areas. For example, Texas has two RFG areas: Houston and Dallas-Fort Worth. The July 1, 2001, population of the Houston control area was 4,795,974, while the population of the Dallas-Fort Worth area was 4,739,437, for a total Texas RFG control area population of 9,535,411. The average MTBE concentration of the winter RFG in Houston was 10.43 volume percent (10.21 weight percent) and for Dallas it was 10.10 volume percent (9.89 weight percent). A population-weighted average State MTBE concentration is then:

(4,795,974/9,535,411) x 10.43 + (4,739,437/9,535,411) x 10.10 = 10.27 volume percent

California represents a complication in that the entire State consumes reformulated gasoline, but only four areas are mandated by the EPA and have quality surveys reported. The Los Angeles and San Diego areas were mandated by the EPA at the start of the RFG program in 1995. Sacramento was added beginning Jan. 1, 1996, and the San Joaquin Valley joined on Dec. 10, 2002. In 2001, the three Federal RFG control areas (not including the San Joaquin Valley) represented about 64 percent of the total California population, and by assumption RFG sales. Although the EPA reported that these three areas have used MTBE exclusively the same cannot be assumed for the rest of California. For example, in 2001, the Federal Highway Administration reported that 94,164 barrels per day of gasohol, which contains ethanol, was sold in the State. The volume of non-Federal RFG that contains MTBE was calculated by subtracting the gasohol sales volume from the population-weighted share of total California RFG sales in non-Federal RFG areas as shown in Table A1.

EPA product quality surveys are also missing for Phoenix, Arizona, which is a State rather than Federal RFG program. Phoenix has a winter ethanol program. For the summer Phoenix allows use of either Federal RFG or CARB RFG with no oxygen mandate. Theoretically they could be MTBE-free, but Stillwater (2002) notes that "according to the Arizona Dept. of Weights and Measures, most of the summer gasoline is [Federal RFG], and most of the gasoline provided by the LA refiners to Arizona is [Federal RFG]." We assume that MTBE consumed during the summer months in Phoenix contains an average 10 volume percent MTBE.

4. Finally, the average MTBE concentration (percent by volume) in reformulated gasoline by State is then multiplied by total reformulated gasoline sales by State reported by the Energy Information Administration (Petroleum Marketing Annual, Table 48, "Prime Supplier Sales Volumes of Motor Gasoline by Grade, Formulation, PAD District, and State") to determine the volume of MTBE consumed.

We can compare our calculation on MTBE use in California reported in Table 2 with the survey of California refiners that was begun by the California Energy Commission (CEC) in January 2000. The CEC reports the quantity of MTBE blended at each of 13 refineries for use in the production of CARB RFG and intended for sale in the State.

Oxygenated Gasoline

The method for estimating the MTBE content of oxygenated gasoline is similar to that for reformulated gasoline except that EPA quality surveys of oxygenated gasoline are not available. However, EPA does report estimated MTBE and ethanol shares of the individual oxygenated gasoline markets (Environmental Protection Agency, State Winter Oxygenated Fuel Programs). Oxygenated gasoline sales for each control area are estimated based on State-wide sales times the control area population share. Each control area's oxygenated gasoline volume is multiplied by the MTBE market share. MTBE volumes are then calculated assuming the oxygenated gasoline contains 15 volume percent MTBE.

8. Appendix B. MTBE Imports and Exports

Virtually all MTBE imports come into the East and West Coasts (see Table B1). The phaseout of MTBE in California should have the greatest impact on MTBE imports. California consumes about 90,000 barrels per day of MTBE. About two-thirds of California's MTBE demand is supplied by imports from Canada, Malaysia, Venezuela, and the Middle East.

Most MTBE exports leave the U.S. from the Gulf Coast (see Table B2). Opportunities for increasing MTBE exports from the U.S. may be limited. With the exception of Mexico, most MTBE exports return to the U.S. in imports of finished reformulated gasoline. For example, during 2000-2001 an average 3,279 barrels per day of MTBE was exported to Canada. During the same period an average 65,600 barrels per day of finished reformulated gasoline, containing about 6,600 barrels per day of MTBE, was shipped from Canada to the U.S.

Europe is becoming a major consumer of MTBE. The maximum allowable concentration of MTBE in the European Union is 15 percent by volume. The MTBE share of the gasoline pool in the European Union averaged about 1.9 percent in 1997 (European Fuel Oxygenates Association, 2000). Italy has been the leading European consumer of MTBE (11.1 thousand barrels per day in 1998), followed by Germany (7.6 thousand barrels per day), and Spain (7.5 thousand barrels per day) (U.S. International Trade Commission, 1999).

MTBE demand in Europe may increase as refiners there reserve substitutes for MTBE such as alkylate for the U.S. East Coast market. MTBE consumption in Europe may also grow after January 2005, when the maximum allowable aromatics concentration in gasoline is lowered from 42 percent to 35 percent by volume. Demand for high octane blending components such as MTBE may also increase in non-European Union Eastern Europe countries as a lead substitute.

9. Appendix C. Glossary of Terms

10. End Notes

1. Connecticut may delay its ban on MTBE from Oct. 1, 2003, until Jan. 1, 2004, to make it consistent with New York State's scheduled ban. Senate Bill 840 passed the Joint House-Senate Environment Committee on March 17, 2003, and is awaiting State Senate and House action.

2. ConocoPhillips is reported to already have completed the switch from MTBE to ethanol. Shell, BP, and ExxonMobil indicated their intention to switch out of MTBE blended gasoline in California markets by the first quarter of 2003. Valero, ChevronTexaco, and Tesoro do not intend to complete the switch to MTBE-free gasoline until California's MTBE ban comes into effect next January (Energy Information Administration, 2003). The California Energy Commission fourth quarter 2002 survey of California refiners, however, shows no reduction in MTBE use (California Energy Commission, 2003).

3. While separate MTBE- and ethanol-blended gasoline batches may each satisfy the RFG requirements, mixing the two may result in a blend that violates allowable VOC emissions because of the ethanol's effect on the vapor pressure of the MTBE-blended gasoline. EPA recently rejected a request from several trade groups for the California market to allow refiners and distributors to mix ethanol and MTBE-blended gasoline during the transition (Energy Information Administration, 2003).

4. MTBE currently provides more than 280 thousand barrels per day of volume to gasoline, which represents about 3 percent of total gasoline demand. Most of the MTBE (almost 90 percent) is used in reformulated gasoline (RFG), which makes up about one-third of the total U.S. gasoline market. RFG is gasoline that, on average, significantly reduces emissions of Volatile Organic Compounds (VOC) and Toxic Air Pollutants (TAP) relative to conventional gasolines. RFG is more difficult to produce than conventional gasoline and originally was mandated only in the nine cities with the worst smog (Los Angeles, San Diego, Chicago, Houston, Milwaukee, Baltimore, Philadelphia, Hartford, and New York City). Other areas that also have a history of smog problems voluntarily joined the RFG program. Today, RFG represents about 1/3 of gasoline consumption (Energy Information Administration, 1999)

5. On March 29, 2001, EPA promulgated regulations setting standards for gasoline toxics performance levels (61 Federal Register 17230). Under these requirements, refiners must maintain their average 1998-2000 toxics performance levels, which are better than what regulations require, for benzene, formaldehyde, acetaldehyde, 1,3-butadiene, and POM, identified as "toxic air pollutants". For more information refer to the EPA Office of Mobile Sources web page at http://www.epa.gov/otaq/toxics.htm.

6. Gasoline emissions are calculated using the EPA complex model (http://www.epa.gov/otaq/rfg.htm#models). A "baseline" fuel with 2.1 weight percent oxygen as MTBE lowers acetaldehyde emissions by 7.0 percent with a reduction in total toxics emissions of 6.9 percent. A baseline fuel with 2.1 weight percent oxygen as ethanol increases acetaldehyde emissions by 69 percent while lowering total toxics emissions by 3.5 percent. The increase in toxics emissions with ethanol versus MTBE could be higher when we account for the lower dilution effect with the smaller volume of ethanol blended to provide 2.1 weight percent oxygen.

11. References

California Energy Commission. Quarterly Report Concerning MTBE Use in California Gasoline. Publication P300-02-002V4. Sacramento, CA, February 2003. http://www.energy.ca.gov/mtbe/documents/2002_MTBE_4TH_QTR_REPORT.PDF.

Energy Information Administration. Demand and Price Outlook for Phase 2 Reformulated Gasoline, 2000. Washington, DC, August 1999. http://www.eia.doe.gov/emeu/steo/pub/special/rfg4.html.

Energy Information Administration (2002a). Renewable Motor Fuel Production Capacity Under H.R.4. Washington, DC, September 2002. http://www.eia.doe.gov/oiaf/servicerpt/fuel/pdf/question2.pdf.

Energy Information Administration (2002b). Supply Impacts of an MTBE Ban. Washington, DC, September 2002. http://www.eia.doe.gov/oiaf/servicerpt/fuel/pdf/question1.pdf.

Energy Information Administration. Status and Impact of State MTBE Ban. Washington, DC, March 2003. http://www.eia.doe.gov/oiaf/servicerpt/mtbeban/index.html.

Environmental Protection Agency. Water Phase Separation in Oxygenated Gasolines . Washington, DC, February 27, 1996. http://www.epa.gov/otaq/regs/fuels/rfg/waterphs.pdf.

European Fuel Oxygenates Association. MTBE Resource Guide, Appendix 5, Table 2.4. Brussels, Belgium, Nov. 2000. http://www.efoa.org/fr/ressource_guide/here.htm.

Meridian Corp. Properties of Alcohol Transportation Fuels. U.S. Dept. of Energy, Washington, DC, 1991.http://www.hawaii.gov/dbedt/ert/afrw.html.

Stillwater Associates. MTBE Phase Out in California. California Energy Commission: Sacramento, Ca., March 2002. http://www.energy.ca.gov/reports/2002-03-14_600-02-008CR.PDF

Stratco/Purvin & Gertz. Refining Options for MTBE-Free Gasoline. Publication AM-00-53, presented at the 2002 NPRA Annual Meeting in San Antonio, TX. http://www.stratco.com/pdf/RefiningOptionsPaper.pdf.

U.S. International Trade Commission. Methyl Tertiary-Butyl Ether (MTBE): Conditions Affecting the Domestic Industry, Table 2-2. Publication 3231. Washington, DC, September 1999. http://www.usitc.gov/wais/reports/arc/w3231.htm.

U.S. International Trade Commission. Harmonized Tariff Schedule of the United States (2003) (Rev. 1), Chapter 99. Washington, DC, February 7, 2003. http://dataweb.usitc.gov/SCRIPTS/tariff/0301c99.pdf.

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