US refiners decry latest EPA proposal for tougher auto pollution standards


WASHINGTON -- The Obama administration is moving forward with tough new standards to cut pollution from cars, people briefed on the plans said Thursday, prompting an outcry from refiners that say the proposal will raise the cost of producing gasoline by nearly 10 cents/gal.

The Environmental Protection Agency is expected to announce the proposal as early as Friday. It is expected to require refiners to reduce the amount of sulfur in gasoline to 10 parts per million, down from the current standard of 30 ppm, people familiar with the issue said.

Sulfur, a natural ingredient in crude oil, reduces the performance of a car's catalytic converter, a key piece of emissions-control equipment. By limiting sulfur content, the EPA hopes to make cars emit fewer pollutants.

"I think this proposal is the single most effective step EPA can take right now to reduce smog," said Clean Air Watch president Frank O'Donnell.

The proposal is also expected to impose new tailpipe emissions standards on cars starting with model year 2017 vehicles. These will require the installation of better-performing catalytic converters.

Auto makers are preparing for the standards because nearly identical requirements have been adopted by more than a dozen states, including California. As a result, auto makers are generally on board with the EPA's new proposal.

The American Petroleum Institute, however, which represents refiners, says the standards will cost $10 billion in upfront capital expenditures and an additional $2.4 billion in annual compliance costs.

The standards will ultimately raise the price of producing gasoline by 9 cents/gal, the institute says, which would likely be passed on to consumers in the form of higher prices at the pump.

"The costs are significant and could easily impact the competitiveness of US refineries," said Bob Greco, a director at API.

The EPA's clean-air chief, Gina McCarthy, who has been nominated to head the agency, has said a tighter sulfur standard would affect the price of gasoline by only a penny a gallon. The EPA wasn't immediately available for comment.

The proposal would go out for public comment and could change before becoming final.

The EPA was initially expected to release the proposal on sulfur, known as the Tier 3 proposal, in 2012. The Obama administration delayed its release. It was facing political heat at the time over high gasoline prices.

The Tier 3 standard would replace Tier 2 sulfur standards, adopted by the Clinton administration in 2000.

Dow Jones Newswires

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