10.07.05

Senators Burr, Allen Introduce Legislation to Stabilize Gas Supply, Help Reduce Gas Price Spikes While Maintaining Environmental Standards

Senators Richard Burr (R-NC) and George Allen (R-VA) today introduced the Affordable and Reliable Gas Act of 2005, legislation to help decrease U.S. vulnerability to gasoline price spikes by reducing the number of available special fuel blends on the market, commonly known as boutique fuels, and consolidating the number of clean fuel blends.

The large number of boutique fuels has reduced gasoline availability because the variety of gasoline blends makes it more difficult to substitute blends in response to a gasoline shortage. For example, a locality using one boutique fuel facing a gasoline shortage may not be able to use the gasoline of a nearby community and would be forced to seek gasoline from more distant community thereby increasing cost and lengthening the shortage period. The number of boutique fuels also increases production and delivery costs of gasoline causing spikes in gasoline prices.

Building off of the recently enacted Energy Policy Act of 2005, the Affordable and Reliable Gas Act of 2005 would stabilize the supply and cost of gasoline by placing a cap on the number of boutique fuels on the market - with the goal of one diesel fuel and four gasoline fuels in use across the nation, outside of the state of California, by December 31, 2008, should the Environmental Protection Agency and the Department of Energy determine the reduction in the number of boutique fuels would not cause a major gasoline supply disruption. The legislation maintains the stringent Clear Air Act environmental standards by requiring the selection of each fuel blend be based on its ability to reduce ozone emissions as in current law.

"The price spikes we have recently seen at the pump are directly attributable to our inability to easily move gasoline supplies from one locality to another," said Senator Burr. "By reducing the number of boutique fuels, we can assure a more reliable gasoline supply, thereby reducing and stabilizing gas prices without sacrificing existing environmental standards."

In June of this year, the Government Accounting Office (GAO) found that "the proliferation of special gasoline blends has made it more complicated to supply gasoline and has raised the costs, significantly affecting operations at refineries, pipelines and storage terminals." The effects of this increase were seen in the supply disruptions and price increases from the aftermath of Hurricanes Katrina and Rita.

In September, Burr introduced legislation with Senator Allen to require the Secretary of Energy to report to Congress on the existing federal plans and procedures related to significant interruptions in the transmission of gasoline and other petroleum products. The Senators also called on the Environmental Protection Agency (EPA) to extend existing waivers for federal reformulated gasoline (RFG), sulfur controls and on-road diesel sulfur standards. The EPA extended the waivers in September.