| For Immediate Release December 4, 2000 |
Contact: Gloria Bergquist, (202)
326-5596 Eron Shosteck (202) 326-5501 |
Washington, D.C. - A new study released by the National Economic Research Associates (NERA) contradicts an American Petroleum Institute (API) claim that EPA's proposal to regulate diesel fuel would result in dramatically increased diesel fuel costs.
The NERA study, commissioned by the Alliance of Automobile Manufacturers, disputes the API charge that the EPA's new rule would increase diesel fuel prices by 15 to 50 cents per gallon and significantly reduce diesel fuel supplies as a result.
The NERA review found the API study too pessimistic on the market response to sulfur removal costs, investments in new capacity and potential imports.
NERA identified four major shortcomings in the API study: 1) it relied on estimated compliance costs, which alone are insufficient to predict future diesel fuel prices; 2) the analysis omits potential sources of clean diesel fuel supply; 3) its assumption that import prices would be linked to the highest U.S. refinery compliance cost is arbitrary and pessimistic; and 4) its estimated regulatory compliance costs may be based on unrealistic and pessimistic assumptions
"According to the NERA, 15 cents per gallon is not a reliable estimate of the long-term price increase of clean diesel fuel," said Alliance President & CEO Josephine S. Cooper. "What U.S. consumers see will be substantially smaller."
In addition to refining costs and overall fuel supply, EPA's rulemaking must also consider how refiners will deliver ultra low sulfur diesel fuel (ULSD) to the consumer. The Alliance believes that a universal, one-time changeover to the new fuel would be the best approach for consumers and for the country.
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