Statement of Senator James M. Jeffords, I-Vt.
U.S. Senate Committee on Environment and Public Works
The Impact of the Elimination of MTBE
Mr. Chairman, thank you for holding this hearing. We will hear testimony today on the effects of eliminating MTBE as a gasoline additive. I hope we will look carefully at this issue. I do not believe that the elimination of MTBE will have a significant impact on the gasoline market. I do believe it is the right thing to do for the environment. MTBE is an additive that helps gasoline burn more cleanly. It has been used since 1979. But we now know that MTBE is also a groundwater contaminant. Low levels make water undrinkable due to offensive taste and odor. High levels are potentially cancer-causing in humans. Although the Clean Air Act does require the use of re-formulated gasoline in areas with unhealthy levels of air pollution, it does not specify that MTBE must be used. Refiners have the ability to use other additives to clean up their gasoline, and many are using ethanol and other petroleum-derived compounds. The Energy Information Administration issued a report in February about the effect of our new energy law and market forces on the use of MTBE. Our hearing is in response to this report. But the report is only one piece of information. It is not really a price prediction. It is a snapshot of market conditions, and it is now more than a month old. My real concern is that we get a better understanding of how markets have responded to this report. Actions to eliminate MTBE from the marketplace are certainly not new. Twenty-five states now have full or partial bans on MTBE. The Environmental Protection Agency recommended that MTBE be banned in the late 1990s. It is my view that we should have acted long ago to swiftly remove MTBE from gasoline. Instead, this Committee responded with legislation to phase out MTBE over four years. Unfortunately, this phase-out was not included in the Energy bill that became law last August. That was one of the reasons I voted against it. I say this to highlight the fact that we routinely try to implement our environmental laws in a deliberate and measured way. The Clean Air Act’s compliant motor fuels have been phased in over long time frames in consultation with industry. We have done this specifically to try to avoid market shocks and price spikes. These are not new requirements, they are not a surprise, and the costs associated with meeting them are known. The oil industry has had plenty of time to phase out MTBE and has resisted doing so. But suddenly, after years of foot-dragging, it has decided to stop using MTBE in gasoline in early May, in an abrupt and potentially disruptive manner. The industry is now faced with a crisis of its own making, and I fear it will use this as an excuse to hike prices at the pump. I am sorry that there are no witnesses at this hearing today to represent the oil industry so that we could better understand why they are responding to the new energy law in this way. In the future, particularly as we examine issues related to the new energy law's fuels provisions, we should have them here. Over the past year, we have seen record-breaking gas prices, the national average exceeding $3 a gallon after Hurricane Katrina. This comes, perhaps not surprisingly, as oil companies continue to enjoy record profits. Exxon-Mobil announced a record quarterly profit of $10.7 billion in the fourth quarter of 2005. Its annual profits increased to $36 billion, up 43 percent from 2004. Now, we are being told that the elimination of MTBE will mean even higher prices – and undoubtedly more profits. I believe what we should really be examining today is why these oil companies are amassing record profits while Americans pay record prices for gas. It is time for answers. During this hearing, I will be listening closely for any documented, real evidence to show that switching away from MTBE is contributing to increases in gasoline prices in a significant way. What we do know is that our country still has much to do to improve air and water quality, and it is this Committee’s first and foremost responsibility to assure that the nation’s laws are protective of public health and the environment. Thank you again, Mr. Chairman for holding this hearing. I look forward to hearing from the witnesses.