Irving, Texas-based company said it would phase out methyl tertiary butyl
ether (MTBE) and convert to ethanol by early 2003, nearly a year ahead of
a deadline set by California Gov. Gray Davis in March.
In 1999, Davis banned MTBE after the suspected carcinogen was
discovered contaminating groundwater supplies. Federal law requires that
gasoline sold in the smoggiest regions in the country include one of the
two additives to help gasoline burn cleaner.
In March, citing fears of possible supply disruptions and resulting
prices spikes, Davis postponed his original phase-out deadline by one year
to Dec. 31, 2003.
Earlier this year, major refiners BP , and Shell Oil Company announced
they will switch additives ahead of Davis's mandated Dec. 31 cut-off. With
Exxon Mobil's switch, more than half the state's gasoline will be
With a daily consumption of 1 million barrels a day, California is the
largest gasoline market in the U.S.
WAR OF WORDS
Critics say the change has been dictated by corporations that want
higher gasoline prices and an escape from millions of dollars in potential
fines in lawsuits around the country, as refiners that sold MTBE-blended
gasoline are sued for water contamination.
"From the perspective of a major oil company, to continue with MTBE is
to continue with exposure to liability," said consultant Thomas Gieskes,
whose firm Stillwater Associates was hired by the state to study the
supply and price impacts of the MTBE phaseout.
"If they don't continue with MTBE, subsequent shortfalls of gasoline
are likely to increase their profit margins," Gieskes added.
Current regulations require cleaner-burning gasolines to be blended
with twice as much MTBE as ethanol.
To replace the MTBE that is taken out, and to stabilize the ethanol
that is added, expensive and scarce ultra-clean fuel components will be
needed to be imported into the state's insular gasoline market, which
analysts say may result gas shortages as high as 10 percent and higher
profits for refiners.
"We understand that various refiners have obtained bargain ethanol
prices in the last few months," California Environmental Protection Agency
spokesman William L. Rukeyser said.
"If Exxon Mobil has locked in a low cost ethanol supply we hope it will
pass the savings along to California motorists."
The sentiment is echoed by the country's most influential environmental
"It's a shame they have to use any oxygenate at all in gasoline. The
real question is what will be the impact on gas prices and air quality,"
Frank O'Donnell, executive director of Clean Air Trust.
Although ethanol has been praised for lowering carbon monoxide
emissions in winter, it can actually contribute to low level smog in basin
areas like Los Angeles, environmentalists said.
"It's been shown that ethanol is a mixed blessing when it is added to
gasoline: that it can reduce some toxic pollutants and increase others,
like nitrous oxides, and increases emissions that don't come out of the
tail pipe," O'Donnell added.