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House Passes Ryan Plan to Fix Fuel System, Stabilize Gas Prices as Part of Energy Bill

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April 21, 2005 | Kate Matus ((202) 226-7326) | comments

WASHINGTON – The U.S. House of Representatives today passed comprehensive energy legislation that includes the substance of a boutique fuels bill (H.R. 1493) introduced by First District Congressman Paul Ryan earlier this month to begin the process of streamlining the nation’s fragmented gasoline system and help prevent the price spikes that have plagued Wisconsin and other areas. Ryan voted in favor of the energy bill – H.R. 6 – because it included his legislation to help stabilize gasoline prices in Wisconsin and throughout the country and because of other constructive provisions to meet the nation’s energy needs, while protecting the environment. The legislation passed the House by a vote of 249-183 and awaits action in the U.S. Senate.

The gasoline provision that Ryan succeeded in placing in the energy bill would halt the proliferation of “boutique” – or highly specialized – fuels and require the Environmental Protection Agency (EPA) and the U.S. Department of Energy to submit a study to Congress within a year recommending legislative changes to create an improved federal fuels system that maximizes supply, enhances efficiency, decreases price volatility and promotes air quality. It would also codify the EPA’s authority to issue temporary waivers during supply emergencies.

Wisconsin drivers and businesses have suffered in recent years from seasonal gas price increases and sudden price spikes due, in part, to the unique type of reformulated gasoline used in certain counties during the summer months and the inability to draw on gasoline from neighboring areas when supply disruptions occur.

“This is a key step toward putting common sense back into our nation’s gasoline supply system. In Wisconsin we’ve experienced unnecessary price spikes for years because of the way our gasoline system and regulations have evolved. Streamlining the system will help us stabilize our prices and avoid these self-inflicted price increases,” Ryan said. “We can have both clean air and more affordable gasoline if we work toward greater standardization of clean-burning fuel blends in this country.”

The growing number of highly specialized fuels around the nation (and the supply shortages and price spikes that tend to accompany these boutique fuels) are an unintended consequence of the 1990 Clean Air Act Amendments. As a result of these amendments, areas found in noncompliance with certain ozone standards use clean-burning fuels in an effort to improve air quality, but there is no standardized menu of fuels from which they must select. 

Under the current system, each area can choose its own unique blend, leading to fragmentation of our nation’s fuel system and very tight supply conditions that foster price spikes, particularly if there is a refinery fire, pipeline break or other supply disruption affecting an area’s particular blend of fuel. There are currently 18 different fuel types and around 45 different fuel blends, once the various octanes are factored in. 

This problem will worsen in the near future if nothing is done because, under new EPA ozone standards, all or most of 474 counties (compared to the current 217 counties or portions of counties) around the nation are in non-attainment of the ozone standards. If these new areas choose their own unique fuels to help them come into compliance with the EPA regulations, supply will grow even more balkanized.

Ryan’s plan, which was passed as part of the energy bill today, would do the following:

  • Cap the Number of Boutique Fuels. EPA would cap the total number of boutique fuel blends that can be used in the U.S. at the current number. States would continue to have flexibility to adopt new, cleaner fuels to address local air quality concerns, but would have to replace an old fuel to adopt a new one thereby preventing any net increase in fuel blends. Furthermore, states will be directed toward the adoption of fuel blends already used in their region to encourage fungibility (the ability of one area to draw on fuel from another area). This cap will ensure no deterioration in gasoline supply fungibility while maintaining environmental protection and promoting consolidation of blends.

  • Require a Study on the Impact of Motor Fuels Regulations on the Environment and the Market. The EPA Administrator and Secretary of Energy will conduct a joint study on boutique fuels and make recommendations on a federal fuels system that will (1) maximize the availability of supply; (2) enhance the efficiency of the distribution system; (3) mitigate the volatility in the price of gasoline and diesel fuel, and (4) promote further advances in air quality protection. The study will be submitted to Congress within 12 months with recommendations for legislative changes to create such a system.

  • Provide the EPA With Limited Authority to Issue Temporary Waivers During Supply Emergencies. In limited circumstances, EPA has granted regulatory “waivers” to help areas respond to supply emergencies by authorizing the use of different types of gasoline. This language would codify EPA's existing authority to assure that waivers are granted based upon narrow and congressionally-authorized criteria and have a minimal impact on environmental protection. Such waivers would apply to the smallest geographic area necessary and would last for a period of 20 days or less.

More broadly, H.R. 6 provides a comprehensive energy policy for the nation, with emphasis on energy production, conservation and incentives for renewable energies. 

Among its numerous provisions, the Energy Policy Act of 2005: 

  • Improves the nation’s electricity transmission capacity and reliability to prevent blackouts. Provides incentives for utilities to form Regional Transmission Organizations for more efficient and reliable operation of the transmission grid. Favors incentive approach to allow regional flexibility, not a one-size-fits-all mandate.

  • Decreases America’s dependence on foreign oil by increasing domestic oil and gas exploration and development on non-park federal lands and by authorizing expansion of the Strategic Petroleum Reserve’s capacity to 1 billion barrels.

  • Expands support for renewables and alternative energy through certain tax provisions.

  • Encourages the use of alternative power sources, launching a program to get hydrogen fuel-cell vehicles on the road by 2020. 

  • Streamlines the regulatory and approval processes for the restart of idle refineries or the construction of new refineries in areas that meet certain criteria.

  • Provides leadership in energy conservation by establishing new mandatory efficiency requirements for federal buildings.

“It is vital for our nation to have a plan to reduce our dependence on foreign oil, develop more renewable sources of energy, promote conservation and upgrade our aging energy infrastructure. While I don’t agree with every provision, overall this is a constructive, balanced blueprint for meeting our future energy needs and protecting the environment at the same time,” Ryan said.

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