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Bob Greco's remarks at press briefing teleconference on Tier 3 Environ study

As prepared for delivery

Press briefing teleconference on Tier 3 Environ study
Robert Greco, API group director, downstream and industry operations
Thursday, April 4, 2013

Opening statement:

Good morning everyone. Thanks for calling in.

EPA’s new Tier 3 gasoline proposal is a prime example of what happens when regulators ignore facts and hard science

Simply put, as proposed, the Tier 3 regulation will impose significant costs on making gasoline. And a study we commissioned by the environmental consulting group Environ concludes that ozone benefits touted by EPA would be only marginal at best.

The good news is that refiners have made massive investments in cleaner gasoline over the last decade and air quality will continue to improve under existing standards.

Thanks to a roughly ten billion dollar investment in environmental mitigation equipment by the industry, our refineries already reduced the amount of sulfur in gasoline by 90 percent in the past decade; from an average of 300 parts per million to 30 parts per million today under the Tier 2 requirements.

The Environ study demonstrates that this earlier sulfur reduction has led to a significant reduction in ambient ozone levels and will lead to further ozone reductions for the next decade.

But the Environ study shows that removing the last bits of sulfur left in gasoline, which will require massive costs, would not lead to measurable ozone reductions.

Further, in an ironic twist, the additional energy needed to refine gasoline to meet the proposed Tier 3 sulfur standard would increase the greenhouse gas emissions from refineries.

These further sulfur reductions could increase the manufacturing cost of gasoline by up to 9 cents per gallon.

More broadly, Tier 3 is just one of a number of ill-conceived EPA regulations that could put upward pressure on prices.

For example, EPA has not ruled out a vapor pressure reduction requirement that could increase refinery costs as much as 25 cents per gallon along with the new Tier 3 rules, according to Baker & O’Brien estimates.

And the NERA study we released a few weeks ago shows that the ever increasing federal ethanol mandate under the Renewable Fuel Standard could increase the cost of gasoline by approximately 30 percent by 2015.

Finally, we know EPA intends to propose other significant refinery regulations such as the Refinery Sector Rule and new Ozone NAAQS requirements and is considering greenhouse gas controls for refineries. All these requirements are in addition to the burdensome Tier 3 Rules.

Americans shouldn’t have to bear the brunt of EPA regulations that lack a basis in science and will, at best, yield negligible environmental benefits.

These rules typify a troubling disconnect between EPA’s regulatory agenda and the everyday reality of America’s energy consumers.

While few would dispute the benefits of fact-based, scientifically valid environmental regulations, EPA should always take care to avoid imposing ineffective and excessively costly rules that pose a serious threat to the industry’s ability to produce the fuels that are essential to America’s economy.

Because, in aggregate, these unwarranted regulatory burdens are a threat to our nation’s reemergence as a global energy leader and could dampen one of the few economic bright spots in our economy.

These regulations will only increase fuel costs, produce little if any environmental benefit and potentially could cost thousands of Americans good-paying jobs.

Exactly the wrong thing to do as our nation struggles to regain its economic footing.

Thank you. And now I’ll be happy to answer your questions.

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