NY’s New Gas Crunch

NY’s New Gas Crunch

Lieberman Op-Ed in the New York Post
November 15, 2003

A new government report has a message for New Yorkers rocked by high gasoline prices: Get used to it. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Blame it on regulations. While the price of oil bounces up and down and gasoline taxes remain steady, the costs of federal and state fuel regulations are going nowhere but up, causing many recent jumps at the pumps.

The next such price hike could come as soon as Jan. 1. That's when <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York State will ban methyl tertiary butyl ether (MTBE), an additive used in much of the state's gas supply. Along with Connecticut and other states, New York is responding to concerns that MTBE has tainted water supplies.

A U.S. Department of Energy report warns that the MTBE ban will be bad news for the driving public. First, the transition from the old gas to the new might send prices sharply higher. Based on the shiftovers in California and Chicago, DOE predicts that "price spikes as large as 30-40 cents per gallon could occur."

Even if we dodge that short-term bullet, DOE sees longer-term price hikes of perhaps five cents per gallon in the summer and one cent the rest of the year. And the relative uniqueness of New York gasoline could lead to fewer suppliers and periodic shortages - and future price spikes.

Ironically, MTBE was given its first big boost under the 1990 Clean Air Act. The feds mandated something called reformulated gasoline (RFG) for New York and other smoggy cities. RFG required either MTBE or ethanol, supposedly to make gas cleaner burning. The cheaper MTBE became New York's additive of choice - until it started showing up in wells and giving water a strange taste.

So the state wants to ban as an environmental hazard something the feds once pushed as an environmental boon.

And MTBE will be likely replaced by ethanol, which is more expensive and raises environmental concerns of its own. (Adding it to ordinary gas would violate summertime anti-smog requirements.)

Sensible or not, New York's MTBE ban is part of the growing list of gas regulations, each compounding the cost of producing motor fuels. Unless governments at all levels decide to streamline this burden, the next few years promise plenty more pain at the pumps.