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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.

By Ron SchererStaff writer / March 29, 2013

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.

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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.”

The proposed changes would make US standards the same as those in most of Europe, Japan, and South Korea, Mr. Kloza says. “We would be joining 45 other countries with tougher fuel standards,” he says.

Republicans quickly attacked the proposed regulation. “The Obama Administration is modeling our regulations after California, which has the worst economy in the nation, and today’s announcement is essentially a guaranteed energy tax hike and unfortunately is just one of many radical policies coming out of this Administration that will deal a heavy blow to middle-class families and small businesses,” said Rep. Steve Scalise of Louisiana, chairman of the Republican Study Committee, in a statement.  

In January, Greenberg Quinlan Rosner Research, often associated with Democratic issues, conducted what it termed a “bipartisan survey” of 800 registered voters for the American Lung Association on whether Americans favored tougher fuel regulations and improved antipollution laws. It found 62 percent of voters supported new gasoline and vehicle standards, and 32 percent opposed them.

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