- The Washington Times - Wednesday, June 20, 2001

A Missouri member of Congress will introduce legislation today to slash the number of "boutique" fuels in the United States, which some officials blame for driving up gasoline prices in the Midwest and West.

Rep. Roy Blunt, a Republican, wants to streamline the requirements that some fuels must meet different environmental specifications, depending on the season and the region in which they are sold.

Mr. Blunt could not be reached for comment yesterday. Congressional sources familiar with the bill he has drafted said it would cut from 45 to three the number of boutique fuels sold across the United States throughout the year.

A spokesman for House Speaker J. Dennis Hastert said the Illinois Republican would back the bill, which is expected to be introduced at a press conference this morning.

"The speaker finds it completely outrageous that consumers have to pay the price at the pump for these cumbersome environmental requirements," said Pete Jeffries, Mr. Hastert's spokesman.

The average price of a gallon of regular, unleaded gasoline in the United States was $1.50 last year and $1.54 during the first five months of this year, according to AAA.

Consumers in California and the Midwest have paid as much as $2 a gallon in recent weeks, and the price in California could reach $3 a gallon this summer, according to the automobile association.

One reason California gasoline tends to be more expensive is because the state uses a special blend that does not contain a methyl tertiary butyl ether, or MTBE, which has contaminated water supplies in the state.

Under the 1990 Clean Air Act, gasoline must be made differently in the summer than in the winter to reduce some of the pollution that helps create smog.

For example, fuel sold in Oregon may not be suitable for sale in California, and fuel made in Western Maryland cannot be sold in Baltimore, according to the American Petroleum Institute, an oil-industry trade group.

The different blends of gasoline required in the different regions of the country make it impossible for refineries and distributors to move their supplies around the country to respond to local gas shortages, said Ed Murphy, general manager of the petroleum institute unit that tracks fuel marketing and refining.

"It's not the boutique fuels in and of themselves that are the problem. It's the lack of flexibility they give refineries to supply product," Mr. Murphy said.

Mr. Blunt's Gasoline Access and Stabilization Act, or GAS Act, would give states a choice of three blends of fuel: conventional gasoline, oxygenated reformulated gasoline or California reformulated gasoline.

The reformulated gasolines are special blends that reduce the volatile organic compounds and air toxins associated with more conventional fuels. The Clean Air Act required the use of oxygenates in reformulated gasolines to help them burn cleaner.

In testimony before a House subcommittee on energy policy Thursday, economists and government officials blamed boutique fuels for soaring gasoline prices in California and the Chicago and Milwaukee areas.

A Congressional Research Service report last year found pipeline disruptions in the Chicago area and federal environmental regulations were to blame for price spikes in the Midwest last summer, when the cost of gas reached $2 a gallon.

"When gasoline inventories in these regions are drawn down rapidly … prices surge. Even if other gasoline markets are not tight, these price surges may be extended since these specialized fuels cannot be quickly resupplied," said John Cook, petroleum research director for the federal Energy Information Administration, an independent agency that tracks power production and consumption.

Don Coursey, a public-policy professor for the University of Chicago, told the panel that boutique fuels have eliminated a national gasoline market in the United States, replacing it with a series of regional oligopolies and monopolies.

"By minimizing the number of different gasolines, the government could in one stroke make gasoline a commodity again in this country instead of the local delicacy it has become," Mr. Coursey said.

Congressional sources said Rep. Bobby L. Rush, Illinois Democrat, would co-sponsor Mr. Blunt's legislation so that it can be promoted as a bipartisan effort. But Mr. Rush's spokeswoman said yesterday she was uncertain if he still planned to sign on to the bill.

Mr. Jeffries, the spokesman for Mr. Hastert, said the bill probably would have several Republican and Democratic co-sponsors.

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