Sunday, June 10, 2007

I just have to go back to this high gas price thing

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USA: August 10, 2005

WASHINGTON - US refiners' attempts to phase out a water-fouling gasoline additive could mean "transition pressure" for gasoline prices next summer, the US Energy Information Administration said Tuesday.

Some refiners will phase out use of methyl tertiary butyl ether, or MTBE, because of liability concerns, the EIA said in its monthly supply and demand report. The chemical is a suspected carcinogen, and has leaked into underground water supplies in many US states.

"As the market adjusts to the new provisions, there could be transition pressure on gasoline prices from the supply loss next summer, depending on the number of suppliers that eliminate their use of MTBE," the EIA said.

The EIA did not quantify the possible price impact in its report.

The phase-out could take about 150,000 barrels per day of gasoline-blending components off the market, the EIA said.

The National Petrochemical and Refiners Association estimates that MTBE accounts for 1.6 percent of US gasoline supplies.

So far, independent refiner Valero Energy Corp. is the only US company to publicly announce it will phase out making MTBE in 2006.

Valero said taking the additive from its US production will reduce its gasoline output by 6 percent.

Some refiners will be able to switch to corn-distilled ethanol as a replacement but others will have to opt for higher quality products, the EIA said.

MTBE has been used by refiners since the 1980s as an anti-knock agent to replace lead. The 1992 Clean Air Act required US refiners to use oxygenates like MTBE to make gasoline burn more cleanly.

But the additive has leaked into water supplies in many US states, rendering water undrinkable...

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