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New EPA Tier 3 Regulations Threaten to Drive Up Gas Prices

"The Obama Administration is modeling our regulations after California, which has the worst economy in the nation."

by
Bridget Johnson

Bio

March 29, 2013 - 4:03 pm

WASHINGTON — Claiming its new rule will save some 2,400 lives a year, the Environmental Protection Agency today introduced requirements for major cuts to sulfur in gasoline.

Energy industry insiders, though, said the new Tier 3 regulations are already in force in California — and part of the reason why the Golden State’s gas prices are 40 cents a gallon above the national average.

“The Tier 3 rule is one more example of the administration’s desire to increase energy prices for Americans,” American Energy Alliance Director of Regulatory and State Affairs Daniel Simmons said. “It is never ‘common sense’ to drive up gasoline prices when so many Americans are struggling to make ends meet.”

EPA said in its announcement that seven dollars in healthcare will be saved for every buck spent to meet the new standards, and claimed sulfur regulations would cost refineries less than a penny per gallon on average “once the standards are fully in place.” New proposed vehicle standards will have an average cost of about $130 per vehicle in 2025.

“The Obama Administration has taken a series of steps to reinvigorate the auto industry and ensure that the cars of tomorrow are cleaner, more efficient and saving drivers money at the pump and these common-sense cleaner fuels and cars standards are another example of how we can protect the environment and public health in an affordable and practical way,” said EPA Acting Administrator Bob Perciasepe.

“Today’s proposed standards – which will save thousands of lives and protect the most vulnerable — are the next step in our work to protect public health and will provide the automotive industry with the certainty they need to offer the same car models in all 50 states.”

The rule proposes a 70 percent tighter particulate matter standard and slashing “smog-forming volatile organic compounds and nitrogen oxides” by 80 percent.

House Science, Space, and Technology Committee Chairman Lamar Smith (R-Texas) warned the EPA’s reach here could cause refinery closures and hike gas prices.

“I am also troubled that the EPA ignored the law and is several years late in releasing a mandatory study to examine potential adverse air quality impacts of renewable fuels and determine if the rule is even necessary,” Smith said.

“I share the concerns expressed by Senate Democrats that EPA has not provided clear scientific justification that Tier 3 regulations are necessary or will benefit public health. Despite knowing the potential adverse effects these regulations could have on the economy, the EPA continues to press forward with its activist agenda. The Obama administration must consider the negative economic consequences before moving forward,” Smith added, vowing his committee will closely review any science the EPA puts forth to back up the rule.

Once published in the Federal Register, the proposal will be available for public comment and public hearings will be scheduled. The rule is expected to be finalized later this year.

Sen. Kirsten Gillibrand (D-N.Y.), a member of the Environment and Public Works Committee, claimed the new regulations would have “practically no effect” on the cost of gas.

“The implementation of Tier 3 emission standards is a big step forward for Americans,” Gillibrand said. “More stringent emission standards would significantly decrease air pollution, create new jobs and increase workers’ economic productivity by reducing the number of sick days they take from lung and heart related ailments. We’ve cleared a crucial step in the process, and I will continue to urge the Administration to move quickly to finalize the rule this year.”

But the top Republican on the Senate Environment and Public Works Committee warned that drivers will likely feel pain at the pump.

“The EPA continues to disregard the facts and potential economic costs of Tier 3, when consumers and our economy can’t afford gas prices going up even further,” said Vitter. “The ignored consequences of Tier 3 include importing more foreign energy, increasing our trade deficit, and reducing our energy security.”

“This move signals a frightening flood of new rules under the potential Gina McCarthy led EPA and represents one of a litany of likely regulations that require transparency to justify both the costs and the benefits,” he added.

In early February, Vitter and Sens. Heidi Heitkamp (D-N.D.), John Hoeven (R-N.D.), James Inhofe (R-Okla.), and Mary Landrieu (D-La.) urged President Obama to back off the push for Tier 3 regulations.

“The planned regulation could impose capital costs on the industry approaching $10 billion, corresponding to a recurring annual cost of $2.4 billion. That translates to an increase in gasoline manufacturing costs up to nine cents per gallon,” the letter stated.

In addition, the senators noted, Tier 2 standards already reduced sulfur in gas by 90 percent — and Tier 3 standards could have an unintended consequence that isn’t very environmentally friendly.

“If imposed, Tier 3 would increase refinery greenhouse gas emissions at a time when EPA signaled that the Agency wants to reduce these emissions,” the senators wrote. “Specifically, a study by energy consulting firm Baker and O’Brien found that additional hydrotreating, necessary to comply with more stringent Tier 3 requirements, would increase emissions of greenhouse gases from the refineries themselves.”

White House spokesman Josh Earnest, gaggling aboard Air Force One en route to Miami today, claimed automakers as well as state and local governments “strongly support” the rule.

“Now, the cost that’s estimated with this — again, according to analysis done by the EPA — is that this could have an impact of about a penny or even less than a penny per gallon of gas,” Earnest said, brushing off the higher estimates as coming from the energy industry.

“There is plenty of evidence to indicate that the impact on prices is pretty small, the impact on the industry is limited, but the health benefits that would be enjoyed if a rule like this is put in place are significant,” he said.

Republican Study Committee Chairman Steve Scalise (R-La.) noted people are already paying four bucks a gallon across much of the country, “and this latest EPA regulation will only drive the price of gas even higher as the Obama Administration continues to pursue their radical tax, regulate, and spend agenda.”

“The Obama Administration is modeling our regulations after California, which has the worst economy in the nation, and today’s announcement is essentially a guaranteed energy tax hike and unfortunately is just one of many radical policies coming out of this Administration that will deal a heavy blow to middle-class families and small businesses,” Scalise said.

“Instead of focusing on handcuffing families and small businesses to higher energy and gas prices and Middle Eastern countries for our oil, President Obama’s time would be better spent encouraging American energy development, creating American jobs and helping to pay down our debt through cutting wasteful Washington spending and economic growth.”

Bridget Johnson is a veteran journalist whose news articles and opinion columns have run in dozens of news outlets across the globe. Bridget first came to Washington to be online editor at The Hill, where she wrote The World from The Hill column on foreign policy. Previously she was an opinion writer and editorial board member at the Rocky Mountain News and nation/world news columnist at the Los Angeles Daily News. She is an NPR contributor and has contributed to USA Today, The Wall Street Journal, National Review Online, Politico and more, and has myriad television and radio credits as a commentator. Bridget is Washington Editor for PJ Media.

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Top Rated Comments   
Hellllloooo! They WANT to drive up the price of gasoline. This is a feature not a bug with the new standards. We're living inside a poorly made remake of "1984". Enjoy it, you morons who voted this fascist back into office.
1 year ago
1 year ago Link To Comment
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All Comments   (16)
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California is the role model for the democratic party. I've lived here all my life and this state is more like a third world country now than it was when I was a kid. Just wait (and wait and wait and wait) until we get our high (wink, wink...nudge, nudge) speed rail running as well as amtrak runs, complete with massive subsidies and a state bankruptcy.
1 year ago
1 year ago Link To Comment
How tiresome to take at face value the claims of potential lives saved and healthcare dollars saved. What a boatload of crap! EPA analyses should be lumped on the same pile of pseudo-scientific fecal matter as Michael Mann's corrupt hockey stick data.

How's about we calculate how many children will go without food because of the increases in gas prices their single mom has to pay to get to her second job?
1 year ago
1 year ago Link To Comment
In my middle class mid-peninsula neigborhood half way between SF and SJ, a three bedroom two bath house is listed at $1,220,000. You don't have the worst economy in the country to have prices like this. California is a sick and deranged place but the economy isn't bad.
1 year ago
1 year ago Link To Comment
That's because liberal California is feeding off the last of the wealth built up by previous decades of hard workers and other doers. High property values come from the laws liberals have passed to squeeze out the undesirables like minorities and working class people, and the real middle class.

Anyway, California can't hide its troubles much longer.
1 year ago
1 year ago Link To Comment
"Sen. Kirsten Gillibrand (D-N.Y.), a member of the Environment and Public Works Committee, claimed the new regulations would have “practically no effect” on the cost of gas."

-------------------

Yeah right! Just like the huge savings from the 'Afordable' Health Care Act eh? Stupid cow! Is she jockeying for position with Sen Patty Murray for stupidest senator?
1 year ago
1 year ago Link To Comment
"EPA said in its announcement that seven dollars in healthcare will be saved for every buck spent to meet the new standards..."

This is in keeping with the Pelosi proclamation that every dollar doled out by the administration in welfare would result in a corresponding increase in favorable economic activity of a dollar and seventy cents.

If the administration used just negative economic proposals for all the nations business, why, I do declare, we would soon be out of debt and on the road to staggering prosperity. Why can't we see that? Huh?
1 year ago
1 year ago Link To Comment
Hellllloooo! They WANT to drive up the price of gasoline. This is a feature not a bug with the new standards. We're living inside a poorly made remake of "1984". Enjoy it, you morons who voted this fascist back into office.
1 year ago
1 year ago Link To Comment
Dave, the problem, and it is a genuine problem, is that the morons probably will enjoy it. That's why they are called "morons".

1 year ago
1 year ago Link To Comment
Oh, I'm sure the true believers will, Yooper. It will give them something else to feel morally superior about. You can't reason with people who are, de facto, mentally ill. But, I'm hoping (though it is a faint hope, I'll grant you) that, at some point, a lot of the "Honey Boos Boos" and LIVs who voted for Barky out of complete cluelessness will stop and go, "Hey, what the hell! Why is gas $2/gallon higher!?!? We can't afford to go screw around at the beach today!" and gradually direct their anger at the guy who made it $2/gallon higher. Like I said, it's a faint hope, but it's about all I have left for this country.
1 year ago
1 year ago Link To Comment
As the gasoline price goes up Big Oil will have greater gross profits. The media will report “record profits” while conveniently leaving out the term “gross”. Obama will shout “it’s all the fault of the Big Oil companies and the Republicans refusal to levy more taxes on their obscene profits”. The morons will buy it.
1 year ago
1 year ago Link To Comment
Well, Yooper, I did say it was a faint hope. :-)
1 year ago
1 year ago Link To Comment
Comparison of wholesale price of gasoline before taxes are added.

California: http://www.eia.gov/dnav/pet/pet_pri_refmg_dcu_SCA_m.htm

Texas: http://www.eia.gov/dnav/pet/pet_pri_refmg_dcu_STX_m.htm

Sure looks like more than a penny per gallon difference in price. Not sure how much low sulfur gasoline gasoline will cost, but the rise in diesel prices relative to gasoline suggests this will be expensive.

Add in the cost of taxes and the retail gasoline prices diverge further.
http://www.gasbuddy.com/gb_gastemperaturemap.aspx
Must really suck to have to buy gasoline in California.
1 year ago
1 year ago Link To Comment
Yep--diesel used to be much less expensive that gasoline. Now its more. Much more. And considering the Obama administrations track record on any kind of economic forcast I have a feeling this is going to be a lot worse.

And just what kind of modifications to the refineries will this take, and how long and how expensive is this going to be? I smell something bad and it isn't sulfur in the air.
1 year ago
1 year ago Link To Comment
And that high cost of diesel is hitting farmers, loggers and others in the primary industries hard. Then there are the increased transportation costs for trucks and trains running up the price of everything. But do the politicians take steps that would be helpful like cutting the taxes on diesel? Of course not. They might set up some clunky federal "emergency" program that takes a year to get going, by which time many who needed help have folded, and is nearly impossible to actually get help from.
1 year ago
1 year ago Link To Comment
In Kalifornia, we always hear about the high value of our crops. Too bad they don't include the punishing high cost of growing those crops. Having said that one way we have decreased the cost is to mechanize crop harvesting but there are still some crops that must be hand harvested. Mechanize the harvest, drive up the cost of fuel. Now sacramento would rather supply water to the delta to sustain "smelt" that are not indigenous to the area rather than to give it to farmers to grow their crops. Ever tried to grow something without water? This is the way we roll in Kalifornia. To democrats, there are only a limited number of areas that are important in Kalifornia: San Francisco, LA basin, San Diego. The rest can dry up and blow away. All the rest of the state is good for is to put high speed rail through it.
1 year ago
1 year ago Link To Comment
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