U.S. Clean-Gasoline Rule Opposed by Oil Group Said Near

The Environmental Protection Agency proposed standards aimed at cutting the amount of sulfur in gasoline by two-thirds by 2017, a move oil industry groups said may increase the price at the pump.

“These common-sense cleaner fuels and cars standards are another example of how we can protect the environment and public health in an affordable and practical way,” EPA Acting Administrator Bob Perciasepe said today in a statement.

The standards, which also include emissions reductions for passenger cars and trucks, will help prevent as many as 2,400 premature deaths annually by 2030, according to an EPA fact sheet. While the costs of the program would be about $3.4 billion by that year, the resulting health benefits would be worth as much as $23 billion, according to the agency.

With the sulfur standards, the government is targeting a gasoline ingredient that hurts the effectiveness of vehicles’ catalytic converters, allowing more smog-causing pollutants into the air. Smog is linked to a variety of heart and lung ailments.

Comment Period

The EPA will offer the public and stakeholders a comment period before it moves ahead with the so-called Tier 3 rule, which has pitted the oil industry against environmental groups and automakers.

The standards would cut the amount of sulfur in gasoline to 10 parts per million from 30, according to the agency. The proposal would also reduce emissions of smog-forming volatile organic compounds, nitrous oxides and particulate matter from vehicles, the EPA said.

“These common-sense standards will save lives, save money and clean up our air - all at a minimal cost,” Luke Tonachel, senior vehicles analyst based in New York for the Natural Resources Defense Council, said in a statement.

Oil-industry officials and Republicans in Congress criticized the proposal as expensive and onerous.

The standards would raise gasoline production costs by as much as 9 cents a gallon, according to Bob Greco, a director at the American Petroleum Institute, a Washington-based trade group. Other proposed EPA regulations, including a mandate for ethanol use, would also boost production costs and would be passed along to motorists, he said.

Regulation ‘Tsunami’

“There is a tsunami of federal regulations coming out of the EPA that could put upward pressure on gasoline prices,” Greco said in a statement.

The industry since 2004 has already reduced sulfur levels in gasoline by 90 percent, and new rules will require an additional $10 billion in infrastructure investment and $2.4 billion in annual operating costs, according to a statement issued today by the American Fuel & Petrochemical Manufacturers, a Washington-based industry group.

“The ignored consequences of Tier 3 include importing more foreign energy, increasing our trade deficit, and reducing our energy security,” Senator David Vitter of Louisiana, the top Republican on the Environment and Public Works Committee, said in a statement.

The EPA said the standards would cost refineries less than a penny per gallon of gasoline, on average. The proposed standards, to be phased in between 2017 and 2025, will carry an average cost of about $130 per vehicle in 2025, the agency said.

Automakers have said the proposal will put U.S. gasoline on par with fuel sold in Europe and Asia.

“This is a big step forward that will help the U.S. catch up to the cleaner fuels available in other industrialized nations,” Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, said in a statement. Members of the Washington-based group include Ford Motor Co. (F), General Motors Co. (GM) and Toyota Motor Corp. (7203)

To contact the reporters on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net; Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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