America / Economy / Energy / Regulation

Does New EPA Rule Mean More Pain at the Gas Pump or Cleaner Air?

Obsessive behavior surrounding climate change continues as the EPA releases their new Tier 3 program for sulfur regulation in gasoline. The program sets new vehicles emissions standards and lower sulfur content in gasoline beginning in 2017. The policy is projected to be more effective than past emissions policy, because it controls vehicle emissions as well as the composition of gasoline itself.

This program grew out of Tier 2, the first EPA emissions policy, which reduced sulfur content by up to 90%. This was the gateway for control over fuels and fuel efficiency. These requirements began in 2004 and vehicles that rose to the standard utilized advanced emissions control systems and are 70-95% cleaner. The question is, will Tier 3 be as successful as Tier 2?

The price of gasoline is the most concerning aspect of this rule. Though it intends to be cost effective, and increases vehicle cost by about $130 and the annual cost of the program by 2030 would be approximately $3.4 billion. However, the EPA has estimated that health benefits would outweigh the cost. They projected that Tier 3 standards would save between $8 and $23 billion in health care cost. Granted, if the US had cleaner air, that would logically translate to less respiratory related health issues. However, the costs associated with this policy are only projections, we do not know for sure what that savings would be. This is a great goal and cleaner gasoline and air should be something that we are consistently bettering, but this policy may not work as well as it is intended to.

Petroleum manufacturers and refinery companies do not feel as confident in this policy as the EPA does. Though Tier 2 worked relatively well, it worked at the cost of $10 billion in technological improvements and manufacturing adjustments. They believe it would cost another $10 billion despite EPA projections. In addition, removing more sulfur adds another processing step, which increases refinery’s carbon emissions. Many companies hope they will have time to respond to this rule.

Timeframe is one of the most significant obstacles to this rule with a goal of enacting the reform by 2017 the hope is that President Obama’s administration will support the endeavor. In the end, emissions are a huge problem and need to be reduced without a doubt. But this kind of program is far reaching and affects big businesses that need to stay profitable and keep employing people. It is difficult to rationalize the added costs of processing and manufacturing gasoline.

Perhaps, this policy can be implemented on a larger scale, and set goals of reducing sulfur further into the future. Companies could incrementally meet lowering sulfur standards and be held accountable for not meeting those requirements. The private sector cannot turn on a dime. There needs to be more consideration for the repercussions of such a demanding policy with rigid regulation, which could harm production, profit, gasoline prices and even manufacturing jobs.