There is a curious difference between the EPA report on boutique fuels that was actually released by the EPA and the account in the mainstream press.
The EPA on Friday released its report to President Bush on “boutique fuels”, an expression used to refer to the proliferation of different fuel requirements in different communities across the United States. Someone evidently delivered a “draft” version of this report to AP correspondent H. Josef Hebert, whose account of the study was carried by many of the nation’s media outlets on Friday. The Barking Dingo has a version of the AP account that is perhaps a more permanent link than someplace like the Washington Post. Hebert wrote:
The review “did not reveal any studies or empirical data confirming that boutique fuels presently contribute to higher fuel prices or present unusual distribution problems,” said the draft report.
The curious thing is that neither the above statement nor any facts or analysis to support it appear in the final report that was actually released by the EPA.
Now, some may imagine that in the 24 hours between the time that Hebert received his advance copy and the time the EPA released the final version, there was some massive re-editing of the report to eliminate anything that might have been seen as potentially embarrassing to the Bush administration. I’m inclined to guess instead that any such editing would have been in the works well before Thursday, that the EPA staff member who originally wrote the words was miffed that they were taken out of the final report, and that said staff member therefore chose to circulate a “draft” version of the report to the press on the eve of the release of the final report.
In any case, the statement that there are no studies claiming that boutique fuels contribute to higher prices is patently false. For example, a 2005 analysis by Ujjayant Chakravorty and Celine Nauges concluded:
These fuels are costly to produce, but they also segment the market and increase the market power of refiners…. we find that both cost and market segmentation significantly affect wholesale gasoline prices.
The EPA report as publicly released in fact notes the beneficial effect on prices of temporarily waiving requirements last fall:
Recent use of this authority occurred as a result of hurricanes Katrina and Rita, in the late summer and early fall of 2005 when EPA, in consultation with DOE, successfully issued a series of limited fuel waivers for specific gasoline and diesel quality standards. These waivers were authorized and approved based on supply concerns. EPA’s waiver authority and decisions were universally supported by the affected stakeholders.
Presumably the EPA is also aware of the alarms raised by Governor Edward Rendell (D-PA) in his
request last April for a temporary waiver of requirements:
We have information indicating that a major gasoline supplier in the Philadelphia area is reporting more than 160 delivery-needed alarms, and many more fuel outlets reporting that supplies are nearly exhausted.
Cambridge Energy Research Associates advocates further waivers to ease gasoline prices this summer, and the EPA final report acknowledges hearing a “unified message” from those involved in gasoline distribution and marketing that “boutique fuels impact supply and price even in normal market situations.”
It would be pretty surprising to me if the huge differences in the price that consumers pay for gasoline across different parts of the country have nothing at all to do with the fact that different kinds of gasoline are required in different communities. I am nevertheless open to reviewing evidence as to the extent to which that is the case. The ultimate decision of where we stand on the tradeoff between clean air and the cost of gasoline is appropriately one that should be debated in the political arena, and for which different U.S. residents may have different opinions. But a necessary input to that discussion should be an objective, scientific effort to measure exactly what the magnitudes of the tradeoff may be.