Hearing: A Discussion Draft Providing For A Reduction In The Number Of Boutique Fuels
Statement
Hearing: A Discussion Draft Providing For A Reduction In The Number Of Boutique Fuels
Mr. Chairman, thank you for convening this hearing this
morning. And thanks to our panelists for coming before us today.
As we have learned through a series of hearings over the last
few months, there are a number of factors that contribute to high
gasoline prices, including crude oil prices, tight refinery capacity,
and environmental regulations.
Last week, we passed legislation on the floor that would
increase domestic oil supply by allowing oil and gas exploration in
ANWR.
Later today on the floor we will consider legislation that would
streamline the permitting process for new fuel refining capacity by
eliminating needless bureaucratic delay and giving federal courts
the authority to keep projects on schedule.
And here this morning, we will examine a discussion draft of
legislation that seeks to reduce price spikes associated the
environmental premium imposed on the price of gasoline by
boutique fuels in a time of supply disruption.
Non-federal fuel specification requirements reduce the
fungibility of gasoline, especially in a supply shortage situation.
That means that gasoline that can be used in Lubbock cannot be
used in Fort Worth. Gasoline used in Utah cannot be used in
Chicago. This limited inability to move gasoline across the
country in response to local demand results in increased prices at
the pump.
In my home State of Texas, we willingly produce oil and
gasoline to send to our friends in the Northeast because they don't
make those things for themselves. But we pay more per gallon at
the pump because of our generosity. The emissions from our
refineries have a negative impact on our air quality, which means
we must fill our tanks with more-expensive reformulated gasoline.
Studies have shown that air quality has an impact on public
health, and as a physician, public health is paramount to me. I am
certainly not suggesting that we reduce our air standards in order to
lower the price of gas. But we should employ some common
sense. It does not make sense to have 15 different approved fuels
in use across the country, as EPA indicated in their May 31st
report.
The Government Accountability Office has said that boutique
fuels add anywhere between three tenths to 3 cents per gallon of
gasoline. While this may not seem like a lot, with gasoline at
$3.09, this can add up very quickly.
A supply shortage in one of the "fuel islands" created by the
use of boutique fuels, is exacerbated by the area's inability to
import fuel from a neighboring area, which can lead to price
volatility, commonly referred to as "price spikes".
In addition to increased prices at the pump, the logistical
complications of transporting and distributing boutique fuels to the
"fuel islands" could intensify supply shortages if the source of the
fuel is not nearby.
In North Texas recently, the logistical problems associated
with the transition between MTBE and ethanol caused price spikes
that make gasoline in the Dallas Fort Worth area some of the most
expensive in the country.
In EPAct, we capped the number of boutique fuels to that
number already approved by the EPA; with this discussion draft,
we are looking to reduce the number of boutique gasoline fuels in
use across the country.
I am looking forward to hearing from our panelists about the
approach taken in the discussion draft and I'd like to thank you all
for taking the time out of your busy schedules to be with us today.
Mr. Chairman, I yield back.
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