- The Washington Times - Thursday, June 15, 2000

The Environmental Protection Agency (EPA) is investigating possible "price gouging" in the Midwest where the price of a gallon of unleaded regular has topped the $2 mark. But the real crime is the way EPA imposes multitiered regulatory costs invisible to consumers on motor fuels. These costs are borne by consumers who blame the oil companies. But they ought to be blaming federal regulators instead.

The recent spike in gasoline prices is to a great extent attributable to changes in the regulations governing the refining of gasoline from crude oil. The new process by which supposedly "cleaner," "reformulated" gasoline is produced have driven per-gallon costs up by a dime or more during the past few weeks alone. That and pre-existing regulations governing the way motor fuels are produced have added 25-cents or more to the total per-gallon cost of regular unleaded. Throw in federal and state taxes ranging from 40 cents per gallon to more than 75 cents and one quickly sees why gasoline is becoming so expensive. It has little to do with the oil companies and a lot to do with government, at all levels.

Ostensibly, we do get improvements to the roads from motor fuels taxes so we won't quibble overmuch with them. However, "environmental taxes," if you want to call them that, are another matter. These are often of dubious benefit and frequently very expensive to boot. EPA, as was pointed out on this page last week, is under no constraint to factor in the costs of the regulations it promulgates; it simply issues diktats and lets the marketplace worry about how all this will be paid for.

Worse, though, are the unforeseen side effects of EPA's regulatory polices. Until quite recently, for example, EPA required the use of so-called "oxygenated" fuels in many areas, most of them heavily urbanized, as a means of controlling vehicle exhaust emissions and thereby improving air quality. However, one of the chief chemicals used to oxygenate the fuel a compound called Methyl Tertiary Butyl Ether, or MTBE has been identified as a health hazard and contaminant of drinking water. EPA had been warned of the potential risks of MTBE both before and during its introduction as a motor fuels additive. The warnings were ignored. Result? Motorists paid five to 10 cents more per gallon for oxygenated fuels that not only tainted their water supplies, but which did next to nothing to improve air quality. Studies found that MTBE/oxygenated fuels had little or no effect on the emissions output of late model cars; they simply got worse fuel economy than before because the oxygenated fuels had diminished energy content as compared with non-MTBE/oxygenated fuels.

This object lesson in the sagaciousness of EPA bureaucrats should be borne in mind as we contemplate rising gas prices and the introduction of the purportedly miraculous "reformulated" gasolines. The new witches' brew is costing us more at the pump and may cost us something else, too. But we may not know about that until a few years have gone by as happened with MTBE.

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