Imagine if an individual could buy cleaner air and better health simply by paying higher prices on the car lot and at the gas pump. That is essentially the trade-off the Environmental Protection Agency (EPA) may require of the driving public with new rules on sulfur content in gasoline. The new rules require a 60% reduction in sulfur for automobile gasoline starting in 2017 so as to reduce smog and the respiratory problems it creates.
Dubbed the “Tier 3 Vehicle Emission and Fuel Standards Program,” the rules will lower emissions from cars, trucks, and even some heavy-duty machines such as construction and agricultural vehicles. The EPA, which announced the new rules earlier this month, estimates that the standards will help prevent up to 2,000 premature deaths a year and 50,000 cases of respiratory ailments in children by 2030. The agency forecasts between $6.7 billion and $19 billion in annual health care costs savings for treatment of problems such as asthma.
In addition to placing a stricter limit on tailpipe emissions, the EPA decided to target sulfur content in gasoline because it disrupts “the ability of an engine’s catalytic converter to remove tailpipe emissions.” Less sulfur in gasoline—thus more effective catalytic converters—will make it easier for vehicles to comply with the EPA’s lower emissions limits. Once vehicles are emitting fewer particulates, organic compound smog, nitrogen oxide, fuel vapor, and other pollutants such as benzene, the amount of soot, smog, and toxic emissions from vehicles, which currently affects the more than 50 million people who live, work, or go to school close to high-traffic roadways, will reduce in kind.
The new sulfur rules are just the latest step in the Obama Administration’s larger program aimed at reducing emissions from cars and trucks. The EPA and the National Highway Traffic Safety Administration (NHTSA) have already finalized the first-ever rules on fuel efficiency and greenhouse gas emissions for medium- and heavy-duty vehicles effective in 2014.
The White House says the fuel efficiency standards are not only intended to curb harmful emissions, but they are “projected to save 530 million barrels of oil…saving vehicle owners and operators an estimated $50 billion in fuel costs over the lifetimes of the vehicles covered.”
Despite the benefits of improved air quality and long-term fuel savings, the EPA’s regulations will also raise gasoline and vehicle production costs. Recently, the EPA has treated fuels and engines as integrated for the purpose of reducing auto emissions so that both gasoline producers and vehicle makers share the costs of regulation. For example, the recent sulfur standards both require oil refineries to reduce the sulfur in their gasoline and direct auto manufacturers to decrease the amount of tailpipe emissions. Manufacturers’ costs of changing production methods to meet the new requirements are ultimately passed onto consumers through higher gasoline and vehicle prices.
The recent spate of regulations on traditional gas-powered cars may be signaling a more singular focus away from alternative fuels. President George W. Bush in 2003 made a call for federal funding for hydrogen-powered vehicle research. Although the current administration has had its forays into alternative fuel funding, President Obama in his most recent State of the Union address did not directly mention alternative fuel vehicles. He did, however, mention the 2014 higher standards for American trucks.
Just two weeks later, even though the new efficiency and greenhouse gas standards had been in effect only for a month and a half, the White House announced that the EPA and NHTSA will propose rules for the an additional round of stricter medium- and heavy-duty fuel efficiency standards. The White House has directed the EPA and the NHTSA to have the new standards in place by March 2016. Seeming to try to sell the economic benefits of more efficient consumption of gasoline directly to heartland truckers, the announcement gave the example of “an operator of a new 2018 semi truck [who] could pay for the technology upgrades in under a year and realize a net savings of $73,000 through reduced fuel costs over the truck’s useful life.”
The petroleum and automobile industries have had mixed reactions to the new regulations. The Alliance of Automobile Manufacturers said that it is “pleased that EPA recognizes that cleaner cars need cleaner fuels and finalized a rule with significantly reduced sulfur levels and in line with other developed countries.” Indeed, the new sulfur standards are on par with those in California, Europe, Japan, and South Korea—some of the largest automobile markets in the world.
The American Petroleum Institute (API), on the other hand, expressed substantive and procedural concerns. While the EPA estimates the rules will raise gas prices by less than one cent per gallon, API estimates that the rules will increase gasoline manufacturing costs by six to nine cents per gallon.
The EPA expects that most oil refiners will be able to adapt to the new sulfur rules within three years, and the rules provide temporary exemptions for smaller companies. But because the oil refineries operate on a four-to-five year cycle, API says adaptation will impose additional costs which industry will pass on to customers.