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Clean fuel regulations: EPA, oil industry vie over effect on gas prices

EPA on Friday proposed new regulations to require refineries to make cleaner gasoline. The cost? EPA says less than a penny a gallon. Oil industry says nine cents a gallon – and higher gas prices.

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Suzanne Meredith, of Walpole, Mass., gases up her car at a Gulf station in Brookline, Mass., in July 2012. Reducing sulfur in gasoline and tightening emissions standards on cars beginning in 2017, as the Obama administration is proposing, would come with costs as well as rewards.

Steven Senne/AP/File

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The Obama administration proposed on Friday new – and more costly – regulations of the refining industry to produce cleaner gasoline and clearer skies.

If the new rules are implemented as scheduled in 2017, the Environmental Protection Agency (EPA) says, they will spare thousands of people from premature death and prevent respiratory problems in tens of thousands of children. The cost: on average less than a penny a gallon.

Not so, says the oil industry, which has been battling the EPA over the proposed rules. The new rules will add as much as nine cents a gallon to the cost of making fuel and will produce “ambiguous” results, says The American Petroleum Institute. API, the industry’s lobbying arm in Washington, refers to the proposed new rules as part of a “tsunami of regulations” the industry faces this year that could add as much as 65 cents to the cost of producing a gallon of fuel in the future.

Gasoline prices are politically sensitive. Consumers often know how much they have paid for a gallon of gasoline compared with their prior fill-up. When pump prices are rising, consumers grumble and, if prices get high enough, cut back on other discretionary purchases. As a result, economists refer to rising fuel prices as a tax on the economy.

But will Americans pay more for fuel and smile about it if they believe it will result in cleaner air?

“Some will, but the majority won’t,” answers Tom Kloza, chief oil analyst at GasBuddy.com. “There is a sense among a lot of people that we are entitled to cheaper fuel prices than the rest of the world.”

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