This report was authored by Max Pyziur who heads EPRINC’s downstream research program. Max has undertaken extensive assessments of U.S. fuels policy. His work focuses largely on the interaction of government regulatory programs and the cost of transportation fuels. Any assessment of transportation fuels presents formidable analytical challenges given the inherent complexities of evaluating processing systems that produce joint products in which regulatory programs will result in unexpected and unintended outcomes.
Regulatory programs, however, are an integral part of U.S. petroleum markets. U.S. regulatory programs seek to ensure active competition, environmental protection, promotion of alternative fuels, among many other objectives. This report examines the technical constraints and cost implications conferred by a large number of California programs to meet several environmental objectives. Of special concern is whether the fuel specifications set by California authorities are continuing to meet their stated goals in a cost-effective manner.
Enormous reductions have been made across the entire range of criteria pollutants. Although beyond the scope of this assessment, the accelerating cost of meeting California fuel standards shown in this report suggest that some effort should be made to evaluate whether the costs of the program, at the margin, remain effective and whether alternative lower cost strategies might be available to meet the State’s environmental goals.
We welcome comments and discussion on all our research. Policy makers face a challenging environment in making critical tradeoffs from a broad set of public policy goals, and sound decision-making requires a full understanding of the issues that are at stake.