Study finds still significant costs from modified Tier 3 proposal

The US Environmental Protection Agency may have modified its Tier 3 proposal to reduce sulfur levels in gasoline, but the regulations still would raise refiners’ manufacturing costs significantly, said a study commissioned by the American Petroleum Institute.

The study by Baker & O’Brien Inc., which updated one it completed for API in July 2011, addressed impacts from changing only gasoline sulfur regulations. Refiners’ gasoline manufacturing costs could grow by 6-9¢/gal in most markets, it indicated. The earlier analysis, which analyzed impacts from reducing Reid Vapor Pressure as well as sulfur limits, projected a 35¢/gal increase.

“More importantly, EPA has yet to demonstrate any air quality benefits from reducing sulfur in the amount proposed,” Bob Greco, API’s downstream and industry operations director, told reporters during a Mar. 23 teleconference.

“Implementing the new requirements would increase greenhouse gas emissions because of the use of energy-intensive hydrotreating equipment to remove sulfur from the gasoline,” he added.

The new study said refiners’ costs of complying with EPA’s proposed Tier 3 sulfur reduction requirement would total $2.34 billion/year.

API would like EPA to take a step back from Tier 3 and its other proposed rules for refiners, Greco said.

“With the pump price of gasoline already above $4/gal in some parts of the country . . . we must be sure that new regulatory proposals are necessary, properly crafted, practical, and fair,” he maintained.

Contact Nick Snow at nicks@pennwell.com.

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