Another Regulatory Threat: Obama's EPA to Expand Costly Gasoline Regulations
With gas prices reaching a national average of $3.83 per gallon, consumers everywhere continue to walk away with lighter wallets after filling up at the gas pump. Unfortunately, the Environmental Protection Agency (EPA) isn’t doing anything to ease the pain. Its latest round of regulations, the “Tier 3 Motor Vehicle Emission and Fuel Standards,” are set to be proposed in the Federal Register at the end of this year. Coming at President Obama’s request, Tier 3 rules will burden oil refineries with costly regulations that will do nothing to bring down gas prices.
According to AAA, the price of gasoline has risen by almost 56 cents per gallon since January, an unprecedented amount for this time of year. This higher price of gas is a tough blow to American families since the cost of gas often consumes as much as 10 percent of people’s budgets, with a higher percentage for those with modest and lower incomes.
Last Thursday, Treasury Secretary Timothy Geithner attributed this spike in gas prices to the “dangerous and uncertain world” that we live in. But when you look at actions by our federal government, including previous EPA regulations, high gas prices seem less like a misfortune and more like the result of flawed policies. According to the American Petroleum Institute (API), refineries have already spent more than $70 million on reporting requirements for recent EPA emissions regulations alone. These compliance costs get passed along to consumers, who see higher prices at the pump as a result.
Obama’s newest round of regulations only makes this bad situation worse. In May of 2010, the President urged the EPA to adopt the stringent new Tier 3 standards as outlined in a memo written by then-Climate Czar Carol Browner. EPA is now working through that request and will have a draft proposal of the new rules ready toward the end of this year. If they look anything like the Browner memo, the rules will hit consumers twice by capping motor vehicle emissions and limiting the amount of sulfur refiners can use in gasoline production.
As motor vehicle emissions are capped, drivers will have to pay more for costly high-mileage vehicles that they don’t want or switch over all together to electric cars like the $40,000 Chevy Volt. Of course this is part of an overall administration strategy to dictate to the American people what kind of vehicles they can or should drive, dramatically limiting consumer options and therefore our freedoms.
Moreover, as refiners get strangled by all the new red tape, drivers will face higher gas prices at the pump. Existing EPA regulations already require refineries to reduce the amount of sulfur put in gasoline using expensive desulfurization units; mandates for lower sulfur content would force refineries to invest even more to expand or modify existing units, driving up production costs. According to a recent study by consulting firm Baker & O’Brien, the additional compliance costs are estimated to reach as high as $17.3 billion for refineries and force four to seven of them to shut down – with the end result being an increase in gas prices of up to 25 cents per gallon. This is the last thing the administration should be doing in response to high gas prices.
This is just another example of President Obama’s disregard for consumer choice and Americans’ pocket books while he pursues his environmental agenda. We’ve all heard that President Obama admitted that, under his cap-and-trade plan, “electricity rates would necessarily skyrocket” while coal companies shut down or passed the compliance costs on to consumers. Tier 3’s pass-along effect is just as bad, if not worse, for refiners.
The bottom line is that with current technology American transportation relies on a steady supply of gasoline. Government-driven price increases due to tighter regulations simply put consumers and businesses in a corner. Despite what Secretary Geithner may think about gas prices, the government can do something today: stop regulating America’s energy producers out of business.