Fed'l EPA Still "Evaluating" Governor Schwarzenegger's 2004 Request For Reformulated Gasoline Rule Waiver...As LB-L.A. Pump Price Busts 2.40+/Gal Unleaded
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(March 28, 2005) -- With LB-L.A. area gasoline pump prices approaching record levels, the federal Environmental Protection Agency says it continues to "evaluate" a request by CA Governor Arnold Schwarznegger to waive rules on reformulated gasoline that Gov. Schwarzenegger says could produce cleaner air and help moderate soaring CA gasoline pump prices.
As of Monday (Mar 28) at 3:00 a.m., the American Automobile Association's latest information for media outlets indicates unleaded in the L.A.-LB area was selling for roughly $2.402 per gallon, with midgrade at $2.557 and premium at $2.599. The unleaded price is now less than a nickel away from the highest recorded price for unleaded; on October 21, 2004, it hit $2.446 per gallon.
A month ago, unleaded was $2.21 per gallon; a year ago, it was $2.13 a gallon.
The pump price of gasoline outside CA is considerably lower, averaging just over $2.00 a gallon for unleaded.
Nearly a year ago, Governor Arnold Schwarzenegger sent the following request to the federal EPA:
The Honorable Michael O. Leavitt
U.S. Environmental Protection Agency
Dear Mr. Leavitt,
I am heartened by the April 1, 2004, testimony of Energy Secretary Spencer Abraham before the House Energy and Commerce Committee, in which he stated that the Administration is seriously considering California's request for a waiver of the oxygen mandate in the federal reformulated gasoline (RFG) regulations. As you know, California has been seeking the waiver since 1999, and on February 2, 2004, the California Environmental Protection Agency sent you compelling additional analyses demonstrating the basis for an immediate waiver.
Under the Clean Air Act, California qualifies for a waiver because the state has demonstrated that the oxygen mandate prevents or interferes with the attainment of the national ambient air quality standards for particulate matter and ozone. Even beyond the air quality benefits, a waiver can play an important role in moderating the gasoline price spikes that have been experienced recently in California. The waiver will increase refiners' flexibility in producing gasoline, enabling them to change gasoline formulations as needed to respond to changes in supply and market conditions. This can be particularly important as we approach the summer driving season.
What is so important about the waiver is that it presents an all too rare win-win situation. It will improve California's air quality at the same time it moderates gasoline prices. The justification for a waiver is so strong that I believe the serious consideration your agency is now giving our request will necessarily lead to a grant of the waiver. I trust that it will come soon enough that it can have an impact on our current gasoline price situation.
U.S. EPA press officer Dave Ryan told LBReport.com today (Mar. 28) that the agency continues to evaluate the Governor's request. He said he could offer no estimate of when agency action on the matter might be forthcoming.
Governor Schwarzenegger's press office referred our inquiry regarding the requested waiver to CA Air Resources Board...where spokeswoman Gennet Paauwe said the agency is waiting for the federal EPA's response.
As reported last year by LBReport.com,Assemblywoman Jenny Oropeza (D, LB-Carson) convened hearings in spring 2004 as chair of the Assembly Transportation Committee on CA gasoline prices. Testimony indicated that CA's specially formulated gasoline costs about a nickel a gallon more to produce but during adverse market conditions the pump price could be as much as forty cents per gallon higher than elsewhere.
Assemblywoman Oropeza authored a non-binding resolution (AJR 90) urging the federal government to adopt CA's reformulated gasoline and diesel fuel standards as national fuel standards in hopes of increasing supply and minimizing price spikes.
As described in a June 2004 Assembly Transportation Committee legislative analysis:
In response to rapidly increasing fuel prices, the Assembly Transportation Committee, in conjunction with the
Assembly Select Committee on Gasoline Competition, Marketing and Pricing, recently held a series of hearings to determine the cause and impact of these price spikes and to explore possible solutions. Much of the testimony at these hearings focussed on supply constraints caused by California being a "fuel island" due to its relatively unique blends of gasoline and diesel fuel. While California fuels cost perhaps $0.04 to $0.06 more per gallon to produce than do fuels used in most other states, under adverse market conditions, the price at the pump in this state can be as much as $0.40 higher than elsewhere.
In a free-flowing market, shortages in one geographic area can be addressed by shifting supplies from other areas. In the case of gasoline and diesel fuel, California's aggressive measures to improve its air quality have resulted in what some have termed as "boutique" fuels that are not typically produced in or for other American markets. Consequently, fuel shortages tend to be exacerbated in California, with an attendant propensity for localized price spikes.
The author [Assemblywoman Oropeza] contends that having uniform national fuel standards
would help create more fluid markets and mitigate regional shortages and price spikes. Using California's formulations as the national standards would have the added benefit of improving
air quality across the nation.
AJR 90 passed the Assembly on a 44-31 (Oropeza & Lowenthal voting yes). The measure went to the state Senate where it was referred to the state Senate Transportation Committee, with no action taken.
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