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FOR IMMEDIATE RELEASE: March 11, 2004

SCHUMER: REMOVE FEDERAL REQUIREMENT THAT COULD CAUSE GAS PRICES TO CLIMB IN MOHAWK VALLEY

To reduce air pollution, all gas sold in New York is required to contain ethanol, an additive that helps gas burn more cleanly; Supply disruptions could raise local gas prices by
30 cents/gallon by Spring

Schumer urges Environmental Protection Agency (EPA) to grant New York waiver exempting it from ethanol requirement as long as NY shows it has another plan for reducing pollution; EPA eliminated requirement for New Hampshire last month

Mohawk Valley drivers could see the price of gas shoot up by as much as 30 cents per gallon this spring because of a federal requirement from which New York state should be exempted, US Senator Charles E. Schumer warned today. Under federal law, New York's high levels of air pollution make it one of ten states nationwide that must include the additives ethanol or MTBE in its gasoline to help it burn more cleanly. Schumer said that the requirement could drive New York gas prices up dramatically by April because the state has a ban on MTBE, and ethanol is in short supply and very costly to transport into the region. A handful of Midwestern companies control most ethanol production.

Schumer urged the Environmental Protection Agency (EPA) to exempt New York from having to use ethanol to reformulate its gasoline, saying New York deserves a waiver because the state has developed alternative ways of reducing air pollution, making the requirement unnecessary. "Prices at the pump have already gotten out of control and will get much higher unless something is done to rein them in," Schumer said. "One way to do that is to get rid of this oxygenate requirement that tacks on 30-40 cents per gallon. New York has many ways to reformulate gasoline cleanly that won't shoot gas prices through the moon. Let's give those a chance."

For states like New York, ethanol is expensive because it cannot be transported using traditional means like pipelines and needs to be trucked and barged into the region. With only a handful of companies controlling ethanol production, supply problems drive up gas costs. In April, when gas suppliers must switch to new fuel blends in preparation for higher summer temperatures, gas supplies across the state may fall far short of increasing demand.

"If you are far away from these ethanol plants, it has to be produced, put on a truck, a barge, sent down to Mississippi, and then, by boat, sent all around the country and then loaded back, put on a truck, and put into the gasoline. You can see why it is so pricey," Schumer said. "It's also tougher to blend with other parts of gasoline, and that's a one-two punch that could put New York drivers down for the count this summer."

According to the Energy Information Administration (part of the Department of Energy), a result of the oxygenate requirement could be to drive New York gas prices up by as much as 30-40 cents per gallon. Based on a study his office conducted, Schumer today estimated that drivers in the Mohawk Valley could see their bills shoot up dramatically:

• Oneida County drivers would spend $2.5 million more on gas bills if the oxygenate requirement boosts prices by 30 cents for just one month;
• Madison County drivers would spend $583,000 more on gas bills if the oxygenate requirement boosts prices by 30 cents for just one month;
• Herkimer County drivers would spend $760,000 more on gas bills if the oxygenate requirement boosts prices by 30 cents for just one month;
• Lewis County drivers would spend $293,000 more on gas bills if the oxygenate requirement boosts prices by 30 cents for just one month.

To prevent this price hike, Schumer urged the EPA to grant New York an exemption from the requirement, which is part of the Clean Air Act Amendments of 1990. Last month, EPA announced that it would give preliminary acceptance to New Hampshire's plan to opt out of the requirement as long as the state shows it has another plan to reduce air pollution. Schumer said that New York has several ways to burn the gas more cleanly that do not necessitate massive price hikes. For example, refiners in the state have said they can use other chemicals to meet clean air standards, including alkylates and isooctanes.

Schumer said that the EPA should grant New York an exemption similar to the opt-out New Hampshire received this week. “When the price of gas shoots up, it’s real money coming out of the pockets of average people, every single day,” Schumer said. “Who wants to spend an extra $20 a month on gas? Over the course of time, that can translate into hundreds of dollars.”

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