CA: Change in California law may bring gas shortages, higher prices

I agree that the additives are assinine, but I don't think the gasoline burns as cleanly without them.

It depends upon the car. The mix standards were designed for cars built ten years ago. Cars built now would run cleaner on gasoline without oxygenate than cars built ten years ago operating with oxygenate, even when new. OTOH, cars built thirty years ago are MORE polluting than they were before the introduction of MTBE. The reason is that they produce more evaporative emissions than without the oxygenate because the stuff is far more volatile. I have never seen an analysis of that fact (studies of Mexican owned cars and pollution are NOT PC), but I would bet that with the evaporative component that there was no net benefit to adding MTBE at all, never mind all the other environmental problems that came with it.

If the oil companies didn't have to buy ADM ethanol to put in their product to make it meet CARB standards, they wouldn't.

That's not how it worked in California for the first CARB RFG mix. They actually specified the content of oxygenate required in the mixture and demanded more MTBE than was optimal. Moreover, there were only two air basins that needed oxygenates by EPA standards. CARB mandated it for the whole state (as they are doing again). Pete Wilson's wife was then put on the BOD at ARCO. I have little doubt that there is a political payoff involved in setting the new mix specifications.

I have little doubt that there is a political payoff involved in setting the new mix specifications.

You've outlined the case here previously (and to some extent here again) about MTBE being a politically-motivated RFG formulation. I think it's persuasive. Refiners benefitted from that mandatory formulation.

They will lose that benefit under the ethanol requirement, and if there are ties between the refiners and ADM, it's not obvious to me. The refiners have been at loggerheads with them for a couple of decades.

That's not to say that ADM didn't lobby intensively for the change in formulation. I'm sure they did. It would be interesting to see how much they have contributed to California politicians.

That's not to say that ADM didn't lobby intensively for the change in formulation. I'm sure they did. It would be interesting to see how much they have contributed to California politicians.

The use of tax-exempt foundations to launder money really complicates things.

It's a matter of supply. The sudden switch from MTBE to ethanol in California creates a huge demand that the market was not ready for. That's why Gray Davis delayed the switchover from its original date.

Now I may be wrong, but seems to me the corn growers knowing the Ethonol switch was coming have probably more than been prepared for the switch, lets face it Ethonol is a kick back to corn growers always has been. I can see some delays issues regarding getting the equipment all in place, but it is standard equipment, unlike MTBE where it was a new process, ethonol gas is established. SO I am just having a hard time buying that this should cause any sort of massive shortages. Of course this is Cali we are talking about... they can screw up anything out there.

another problem is that corn is in Iowa, drivers are in So. Cal. Takes a lot of effort to get the corn from a field in Iowa to a gas tank in Callie. For most states, the White House is proposing a renewable fuels portfolio approach, so overcompliance in the Midwest can be bought by states that don't have much corn.

Less ethanol can be used than MTBE to meet state blending requirements. Each gallon of ethanol-based gasoline will contain about 6 percent ethanol, compared with 11 percent MTBE per gallon. Since less ethanol can be added to gasoline, the total volume of finished gasoline produced in the state will be reduced by about 5 percent. To keep pace with demand, California will have to import 3 percent to 5 percent more gasoline, said industry expert Phillip Verleger.

I think the problem is the additional gasoline and the current in state refineries being maxed out , Of course the environmentalists will not let a new refinery to be built!

Of course the environmentalists will not let a new refinery to be built!

There is some good news in that regard. While your statement is undoubtedly true, the EPA has given the current refiners some flexibility in modifying their plants which will result in greater capacity. It's still going to require more imported oil to make the gasoline, though.

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