Sticker Shock Comes to Holiday Gasoline Prices
HERE'S a holiday present from the Environmental Protection Agency: higher gasoline prices.
In many of the country's largest metropolitan areas, the price of gasoline is expected to start scrolling up by at least 4 to 6 cents a gallon as a result of federally mandated changes in the fuel formula. However, if some gasoline stations stick to past practices, they could try to price-gouge the unwary with double-digit hikes.
In exchange for higher gas prices, the EPA maintains urban dwellers will get cleaner air when the new gas starts gushing from pumps in such cities as Chicago, New York, Los Angeles, and San Diego. Some entire states, such as Delaware and Connecticut, have decided to join in..
The EPA has tried to minimize the price hikes, maintaining it will only cost about $20 per year per family but result in the equivalent of removing 8.1 million cars from the roads. But most consumer groups expect it will cost more than projected.
The gas, called reformulated gasoline (RFG), is already pulsing through the distribution system from refinery to wholesaler to gasoline station. The American Petroleum Institute says some 30 million barrels of gasoline - representing about 11 days of consumption - is in storage. The US consumes about 7.78 million barrels of gasoline per day. About one third is expected to be RFG.
Although the gas is not required to be sold until Jan. 1, some service stations are already pumping it and higher prices are already showing up. Yesterday, the American Automobile Association (AAA) released a survey conducted by the Computer Petroleum Corporation that found the price of RFG gas rose this week while the price of regular unleaded fuel dropped. The price differential was about 2.2 cents per gallon. The biggest price increases were in Houston, Hartford (Conn.), Milwaukee, and Boston.
The petroleum industry maintains some price increase is necessary since it costs more to refine the new fuel. The oil companies have removed benzine, butane, and pentene from RFG, replacing the chemicals with costly additives. In addition, refineries had to be reconfigured and new tanks added for storage. ``It all cost billions of dollars,'' says Joe Lastelic, a spokesman for the American Petroleum Institute in Washington.
Besides costing more, the gas provides less mileage. The oil industry estimates the average driver will get about 2 percent fewer miles per gallon.
Auto company engineers report they have found no engine problems with the fuel, which can be mixed with the old gasoline without hurting performance. Starting in May, however, the oil companies will introduce a new version of the reformulated gas that is designed to be less volatile. This may present problems for pre-1991 cars with carburetors.
``It will take more cranking in cold mornings to get the car started,'' says William Berman, national environmental director for AAA.
By the year 2000, the EPA estimates the gas will reduce toxic emissions by 20 to 22 percent and nitrogen oxides by 5 to 7 percent. The EPA estimates vehicle emissions are responsible for half of all toxic air pollution.