CWPMA – thoughts on Devolvement to severe non-attainment.
Colorado is the 8th largest state and uses about 2% of the nations gasoline and diesel… You will have heard that the state recently was downgraded to severe non-attainment for failing to meet the .70ppb (parts per billion) and that on road transportation is the leading cause of ozone. Lets look into that and then talk about the governments effect of fuel prices.
The downgrade into severe triggers a requirement for a more stringent fuel blend commonly know as Reformulated gasoline. Ideally the state and federal government would only choose to apply this in the 9 county front range area and only during the current ozone season which for retail sales, runs June 1st through September 15th. Currently Front range users in Colorado (and candidly the fuel disseminates into other non required parts of the state) buy 7.8 R.V.P (with a 1.0 psi. waiver) during this time. This already costs families about 700k per day in increased fuel costs so that less ozone precursor compounds, primarily VOC’s and NOX are emitted. Reformulated Gasoline would conservatively cost $.40 – $.50 cents per gallon more which is an estimate assuming supply security. We shouldn’t assume. Our refinery in Commerce city produces about 40% or so of the gasoline we consume in Colorado, they will have to spend hundreds of millions to retrofit which cannot be done overnight. The rest of the fuel is either trucked in or brought in by pipeline. The state’s second largest supplier doesn’t make RFG, and candidly, serves a large part of the country that doesn’t require it so there has been little outreach on if they will even do it. They represent at least 25% of the market. The 3rd and 4th largest suppliers come from our neighbors to the south where much of the fuel comes in by pipeline. Suppliers from Texas do have experience making boutique fuels as they serve other air challenged markets so the question is, “do suppliers willing to make RFG have the capacity and excess supply to serve the Denver market.” Based on fuel shortage challenges with the current requirements the answer is likely not. So added to that base cost of $.40 we now need to increase wholesale logistical costs. Its also interesting to note that no one is discussing pipeline integrity issues. “Is RFG even compatible to be shipped in the same pipeline as Aviation gasoline for example?” The EPA and the State government should be asking these questions to people who know the answers before these decisions are made.
In 2019 this interesting chart was produced by the lead air quality planning agency in Colorado. It talks about Ozone and how much we actually control as humans that live, work, and raise our families here. At a standard of .70ppb if 60% of the ozone would exist regardless then humans are only accountable for 38ppb. If Colorado doesn’t take advantage of the structural provisions of the Clean Air Act which let states take credit for emissions not produced here but come across borders then not only are our citizens being held accountable for emissions we don’t control we have to tighten down exponentially more on families in Colorado to control a increasing smaller amount of emissions at a exponentially higher cost.
There is nothing in the Clean Air Act or frankly the more targeted environmental measure the state has passed that gives Colorado credit for the hundreds of millions of dollars being spent to give tax credits to E.V. owners (who continue to be subsidized by everyone else for road use) or the hundreds of millions spent to convert power plants on the regulated rate base. The only benefit is measurable reductions which have been qualified in the charts below. But, now the families footing the bill for this are going to be tagged again with in our view is an unnecessary requirements that will cost Colorado Hundreds of millions more per year. If we truly care about relief on working families then the Governor should do more. You will have heard that last summer Denver had days with the worst measurable air quality in the world. Actually that’s true, but it isn’t systemic, and was in due in large part from fires from states to the west. By not taking into account Exceptional events, and structural transient emissions. The Governor and the EPA are allowing China to harm Colorado families.
So has this been effective? Colorado’s population has grown by just under a million people the last 12 years and here are the trend charts for NOX and VOC’s during that time:
Below is a chart taken from the Regional Air Quality Council which shows the progress that we have made in “every sector” since 2011.
The Federal Administrations effort on E-15 the Strategic petroleum reserve – It was with some humor that people actually involved in fuels watched the Biden administration try to tackle the increasingly shackling politics around fuel prices. The release from the strategic petroleum reserve was not even enough to cause more then a momentary blip in crude futures. The war in Ukraine is having a global effect on futures but war is temporary and historic trends show that price stability, minus the increasing inflationary pressures on the dollar, will return the market to normal. Generally speaking, Colorado and the Mountain West generally enjoy some of lowest prices in the country. in part that is due to tax policy, in part the 85 octane allowance, but more to the point it has to do with a relatively stable market where we take advantage of local supply and regional security. When the war in Ukraine ends and families are still paying $4.50 a gallon, The administration won’t have Putin to blame.
I was floored when the President announced he was “going to allow” E-15 sales during the summer months. So one hand his EPA requires Colorado families to pay almost 800 million more in fuel and the next allows fuel that will require extensions by the EPA on the short term waiver protocol that they fought under the Trump administration.
A actually cogent analysis from the clean air task force sums this up - The Clean Air Act prohibits summertime sale of E15. The short version is there’s a law on the books that clearly bars retailers from selling E15 during the summer, and that law isn’t something that a speech by the president or new regulations from EPA can change. The longer version is that Section 211(h)(1) of the Clean Air Act prohibits the sale of gasoline that has a Reid Vapor Pressure greater than 9.0 psi during the “high ozone season,” which runs from June 1 to September 15. (RVP is a measure of volatility; high-RVP gasolines release more volatile organic compounds into the troposphere where those VOCs contribute to ozone formation.) Gasoline-ethanol blends below E50 are more volatile than straight gasoline and cannot readily meet the 9.0 psi RVP requirement. Congress created a “one-pound waiver” at Section 211(h)(4) that increases the RVP limit from 9.0 psi to 10.0 psi, but—and here’s the catch—the waiver is only available to “fuel blends containing gasoline and 10 percent denatured anhydrous ethanol.” That is, only E10 can take advantage of the one-pound waiver. Although E15 is slightly less volatile than E10, its RVP still exceeds 9 psi. It needs a one-pound waiver to meet Section 211(h)’s RVP limit in the same way that E10 does, but it is not eligible for one under current law.
It is also important to recognize that the renewable fuel standards has a RIN component that skews the markets and requires obligated parties to purchase credits….so the President’s decision and his assumption that the price will fall 10 cents per gallon is oversimplified. Relative to saving money on fuel…Ethanol has octane benefits but on a per gallon basis has less energy content non blended fuel which means that you need incrementally more gallons to drive the same distance. How does this save people money?
Colorado should take every step measurable to secure fuels supply security and get us out of this RFG regulation. There is nothing that keeps Colorado from continuing to move forward to attainment, this was the governor’s decision and in light of his measure to defer fuel fee increases…I hope he acts on it.