Start Date

6-12-2001 12:00 AM

Description

The growth of ethanol originates with a number of government regulatory decisions in the gasoline additives market. The ban on lead-based octane additives as a carcinogen during the 70's and the requirement of oxygenated fuels in major U.S. cities in an effort to reduce smog has boosted the ethanol industry. Now a third regulation may also increase ethanol demand during the current decade. Methyl tertiary butyl ether (MTBE), the oxygenated chemical of the petroleum industry, appeared in the drinking water in California and other states that use reformulated fuels. California banned MTBE from gasoline effective at the end of 2002 after the U.S. EPA issued a health advisory against drinking water with MTBE. California's request for a waiver from the federal oxygen requirement for reformulated fuel, which would avoid reliance on ethanol, was denied by the EPA. Ethanol has an assured share of the California reformulated gas market since it is the only remaining oxygen containing additive. Other urban states on the East Coast also face an MTBE ban. Based on the EPA's recent ruling, these states are unlikely to get an oxygen waiver and they will also require ethanol.

DOI

https://doi.org/10.31274/icm-180809-707

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Dec 6th, 12:00 AM

Implications of MTBE Bans for the Iowa Economy

The growth of ethanol originates with a number of government regulatory decisions in the gasoline additives market. The ban on lead-based octane additives as a carcinogen during the 70's and the requirement of oxygenated fuels in major U.S. cities in an effort to reduce smog has boosted the ethanol industry. Now a third regulation may also increase ethanol demand during the current decade. Methyl tertiary butyl ether (MTBE), the oxygenated chemical of the petroleum industry, appeared in the drinking water in California and other states that use reformulated fuels. California banned MTBE from gasoline effective at the end of 2002 after the U.S. EPA issued a health advisory against drinking water with MTBE. California's request for a waiver from the federal oxygen requirement for reformulated fuel, which would avoid reliance on ethanol, was denied by the EPA. Ethanol has an assured share of the California reformulated gas market since it is the only remaining oxygen containing additive. Other urban states on the East Coast also face an MTBE ban. Based on the EPA's recent ruling, these states are unlikely to get an oxygen waiver and they will also require ethanol.

 

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