Should there be an oxygenate mandate? Do we really need one anymore? If so, should we keep on using MTBE? Or should we replace it with ethanol? The debate goes on, while gas prices continue to rise.

In case you have been asleep for the past year or longer, there has been a major debate raging about the oxygenate mandate. Should there be an oxygenate mandate? Do we really need one anymore? If we do need one, should we continue to use methyl tertiary butyl ether (MTBE)? Or, should we switch to something else that will meet the requirements (read ethanol in this case, since it is the only viable alternative)?

MTBE is an oxygenate additive used in reformulated gasoline (RFG), included in about one-third of the nation's gas supply. Its whole purpose is to make gasoline burn cleaner. Back when the Clean Air Act Amendments of 1990 were being passed, a 2 percent oxygenate mandate was required for all RFG. The only economically viable additive that would meet the requirement was MTBE. Since then, it has done a pretty good job of cleaning the air. Those with an interest in MTBE have also successfully ensured that the additive would remain viable by building an infrastructure to supply the additive as well as transport it.

So what went wrong? Not too many years ago, a study by the U.S. Environmental Protection Agency (EPA) showed that MTBE had been leaking into underground drinking water supplies. MTBE was found to cause drinking water to smell (Who wants to drink smelly water?). The additive is also considered a possible cause of cancer. Researchers at the Environmental and Occupational Health Sciences Institute at Rutgers University found that MTBE may cause headaches, eye irritation and fatigue in people sensitive to the additive. In fact, 60 Minutes did a story on MTBE and found that even a small amount can cause a large tank of drinking water to be contaminated and thus be unusable.

All of this has led to heated debate on MTBE and more specifically on ethanol and the need for an oxygenate mandate. In California last March, Gov. Gray Davis signed an executive order that will require a phaseout of MTBE in that state's gasoline by 2003. The executive order poses a bigger challenge in that it directs the California Air Resources Board (CARB) to adopt gasoline regulations to facilitate the removal of MTBE without reducing the emissions benefits of the existing program. California has also decided to ask the EPA to waive the state's requirement for the Clean Air Act's RFG 2 percent oxygenate mandate.

Other states have followed California's lead. New York, Pennsylvania, Connecticut, Maine, Massachusetts and New Jersey, just to name a few, have all either passed laws outlawing MTBE in the near future or their legislatures are considering bills to do so.

At the federal level, the administration, as well as Congress, has gotten into the act as well. In March of this year, the Clinton administration, via the EPA, issued a set of legislative principles that aim to reduce or eliminate the use of MTBE. It included three recommendations to Congress:

First, Congress should amend the Clean Air Act to provide the authority to the EPA to significantly reduce or eliminate the use of MTBE outright. Second, as MTBE use is reduced or eliminated, Congress must ensure that air quality gains are not diminished. Third, Congress should replace the existing oxygenate requirement in the Clean Air Act with a renewable fuel standard for all gasoline. The last recommendation was essentially a call for ethanol to replace MTBE.

The EPA also acknowledged that it has begun the regulatory process to phase out MTBE, but the agency expects the process to take several years to complete. This is because the agency is developing its rule under the Toxic Substances Control Act. The act empowers the agency to prohibit the use of a chemical like MTBE administratively if the agency finds a “reasonable basis” to conclude that the chemical “presents an unreasonable risk of injury to health or the environment.” That is why the EPA is hoping a legislative solution can be arrived at soon.

On the legislative side, Congress is divided between a no-mandate group of legislators and an ethanol supporters group. As you might imagine, Midwest legislators want to see the oxygenate mandate remain with a new requirement for ethanol, while primarily Northeastern legislators would like to see an end to the oxygenate mandate.

More than a dozen bills dedicated to either replacing MTBE with ethanol or eliminating the requirement have been introduced during this session of Congress.

So why are some legislators opposed to ethanol? Some see the recent administration recommendations as a political move to shore up Midwestern support for the administration and possibly play a role in the upcoming election. Ethanol is primarily made from corn and has received heavy federal subsidies. There are other political concerns as well. Northeastern legislators are generally opposed to ethanol due to a lack of ethanol infrastructure in the Northeast. If ethanol were mandated in the Northeast, it would create a tremendous burden on those states to comply.

There are also health concerns associated with ethanol. Ethanol burns cleanly in gasoline, but its evaporative emissions could contribute to ozone formation. Unlike MTBE, ethanol does biodegrade in water. Some are concerned that while it is safe for humans to ingest ethanol, an ingredient in alcoholic beverages, no one is really sure of the long-term effects of inhaling ethanol.

So where does that leave us? Pretty much right where we have been all along. MTBE is still in gasoline until either Congress bans it, replaces it, or does something to it, or the EPA finalizes a rule to phase out MTBE. In the meantime, consumers are stuck with rising gasoline prices.

A recently released report by the Congressional Research Service found that the use of RFG with ethanol is a main factor in the gasoline prices in the Midwest. In fact, the report found that about 25 cents of every gallon of gasoline sold in the Milwaukee and Chicago area is due to ethanol in RFG.

Another 25 cents is attributed to pipeline problems. The Clinton administration is considering rolling back newly implemented environmental performance standards for cleaner burning fuel, or granting temporary waivers from requirements to produce that fuel, as part of an aggressive step to help oil companies immediately lower the price of RFG in the Midwest. At the time this article was being written, fuel prices in the Chicago/Milwaukee area have well exceeded 1999's $2 per gallon.

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