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Posted on  

April 19, 2002

California Jury Verdict Highlights Hidden MTBE Gas Tax

MTBE Clean-up To Cost Consumers 22 Cents Per Gallon of Gasoline

WASHINGTON, DC – On Monday a jury in San Francisco held three oil companies liable for the MTBE contamination of Lake Tahoe in California. Several other companies had settled with the South Tahoe Public Utility District prior to trial. The Tahoe district estimates that clean-up costs could amount to more than $50 million.

“There is a rising gas tax on American consumers – the clean-up costs related to MTBE,” said Bob Dinneen, RFA president. “It doesn’t matter whether local governments or oil companies pay for clean-up efforts; the ultimate cost is borne by consumers in the form of higher taxes or higher prices at the pump. The longer MTBE remains a part of our gasoline supply, the higher this tax will be. MTBE clean-up costs amount to the equivalent of a hidden 22 cent per gallon gasoline tax. The current Senate energy bill contains a bipartisan agreement that will ban MTBE nationwide in four years, but efforts to destroy this agreement by reducing or eliminating the renewable fuels standard (RFS) will do nothing more than extend the use of MTBE and force higher pump prices onto the backs of consumers.”

A study conducted for the city of Santa Monica, that is also suing oil companies for MTBE contamination, found it will cost at least $29 billion to clean-up MTBE nationwide – or 22 cents for every gallon of gasoline sold in the U.S. last year. According to the U.S. Energy Information Administration, 131.6 billion gallons of gasoline were consumed in 2001.

“This jury has sent a clear message to refiners that they should stop using MTBE as soon as possible,” said Dinneen. “For example, in California, every oil refiner has indicated they could switch from MTBE to ethanol by the end of this year. Now that Governor Davis delayed the state’s MTBE ban until 2004 there is uncertainty whether the refiners will move forward. However, this verdict clearly highlights the liability risk of continued MTBE use. The ethanol industry stands ready to supply any oil company wishing to end their use of MTBE and reduce their exposure to future clean-up costs. Switching to ethanol makes sense for consumers and it makes dollars and cents for oil companies.”

The Tahoe trial now moves to the penalty phase where the utility district is seeking actual and punitive damages. Similar suits are moving forward in numerous other states. Fourteen states have acted to ban MTBE as a result of water contamination and other bans are pending.

Powerful opposing forces killed proposed Alaskan oil drilling and tighter fuel standards

By H. JOSEF HEBERT, Associated Press Writer

WASHINGTON - The Senate is moving to wrap up an energy bill, but without two proposals that sparked the greatest political fireworks and may have had the most impact.

Drilling in Alaska's Arctic National Wildlife Refuge (news - web sites), which environmentalists made a symbol of their opposition to the Bush administration's policies, and slapping automakers with tough new fuel economy requirements were found to be politically too hot to accept.

In a showdown Thursday over the future of the refuge, drilling supporters could muster only 46 of the 60 votes needed to end a Democratic filibuster and allow a vote on putting the refuge provision into a broader energy bill.

The House already had approved drilling as part of its energy package and President Bush (news - web sites) had made it a centerpiece of his energy agenda.

"The Senate missed an opportunity to lead America to greater energy independence," White House spokesman Ari Fleischer (news - web sites) declared, echoing Alaska's two senators who described the refuge as a way to reduce U.S. reliance on dictators such as Iraq's Saddam Hussein (news - web sites) for its energy.

Still, eight Republicans abandoned Bush and joined with most Democrats in rejecting drilling in ANWR, as the refuge is called. "There are other, more feasible options for ... reducing national foreign oil dependence," said Sen. Lincoln Chafee (news, bio, voting record), R-R.I.

"Development would irreversibly damage this natural resource," argued Sen. Joe Lieberman (news - web sites), D-Conn., referring to the refuge's coastal plain where thousands of caribou visit and give birth to their young each summer, joined by millions of migratory birds, musk-oxen, polar bears and other wildlife.

While drilling advocates argue the oil could be developed while still protecting the wildlife, Sen. John Kerry (news, bio, voting record), D-Mass., maintained that the oil — estimated as likely between 5.7 billion and 11.6 billion barrels — still wasn't enough to make a serious dent in imports when it would start flowing south in eight to 10 years.

What would help, Kerry argued, would be a significant increase in the fuel efficiency of automobiles and sport utility vehicles, which guzzle 70 percent of the 19 million barrels of oil consumed each day in the United States.

But like the Arctic drilling, the auto fuel economy became a lightning rod in the energy debate. When Kerry pushed to boost federal fuel economy requirements by 50 percent, the auto industry and autoworkers said jobs would be lost and suburban soccer moms would no longer be able to buy SUVs. The proposal was killed last month on a 63-38 vote.

Many of the same senators who opposed the fuel economy increase raised alarms during the Arctic refuge debate over U.S. reliance on oil imports, said Kerry. "They had no interest in national security when we put before the Senate a plan that would have saved America 1 million barrels a day in 2015 and 2 million barrels a day by 2020."

The Senate likely will finish its energy legislation, covering more than 580 pages, sometime next week. Both Senate Majority Leader Tom Daschle, D-S.D., and Republican leader Trent Lott of Mississippi want a bill, as does the White House.

While lacking either oil drilling in ANWR or significant auto fuel economy measures, the bill includes myriad items that are attractive to politically powerful energy industries.



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