For Immediate Release: October 23, 1998
Media Contact: Claudia Chandler -- 916 654-4989



Report Says MTBE Phase Out
Catastrophic In the Near Term,
But Workable In Stages

SACRAMENTO -- An immediate phase out of the gasoline additive MTBE "would be drastic for consumers and catastrophic for California's economy," a staff report released by the California Energy Commission said today. MTBE (methyl tertiary butyl-ether) is a petroleum-based additive that makes gasoline burn cleaner and reduces air pollution.

The Commission's staff report, which was mandated by the Governor and Legislature, looks at three time frames for a possible MTBE phase out. It concluded that the near term removal of the additive could result in up to a 40 percent shortfall in the state's gasoline supply.

Because refiners would need time to convert MTBE facilities to produce a replacement oxygenate, or to import such in the interim, the report likewise looked at the implications of removing MTBE in three years and six years. If MTBE was eliminated in three years, gasoline costs could increase up to seven cents a gallon. The actual per gallon cost increase varies depending on the replacement option selected. On the other hand, eliminating MTBE from gasoline in six years would enable refiners to achieve a normal supply-and-demand balance, and prices could moderate to an average cost increase up to 2.7 cents per gallon.

The report, Supply and Cost of Alternatives to MTBE in Gasoline, evaluated alternative oxygenates that could be used in place of MTBE. The options included ethanol, ETBE (ethyl tertiary butyl ether), TBA (Tertiary Butyl Alcohol) and a mixed oxygenate blend. A study evaluating the health effects of alternative additives by the University of California is expected in November.

The Commission also looked at two additional cases. While one case eliminated oxygenates completely from gasoline, the other case would allow California refiners to blend gasoline with a lower oxygen content (including MTBE). Implementing the lower oxygenate case would require passage of the proposed federal legislation HR 630. Implementing the non-oxygenate case requires both the passage of HR 630 and modification to existing state regulations.

The following table shows the average cost change for each of the cases examined in the report:

TABLE 1

AVERAGE COST CHANGE
Cents Per Gallon
Intermediate Term Long Term
Ethanol 6.1 to 6.7 1.9 to 2.5
ETBE 2.4 to 2.5 0
TBA 0.5 to 1.4 0.3 to 1.0
Mixed Oxygenates -0.2 to 0.2 -0.3 to -0.4
HR 630 -0.2 to -0.8 -0.3 to -1.5
No Oxygenates 4.3 to 8.8 0.9 to 3.7


The Energy Commission will receive comments from industry representatives, and health and environmental agencies at a public hearing on November 13, 1998. The hearing will be broadcast live over the Internet on the Commission's Web site at:

www.energy.ca.gov/realaudio

The report and technical appendices are available on line at:

www.energy.ca.gov/mtbe



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