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EPA Issues Final Report on Localized Fuel Blends Known as Boutique Fuels

Release Date: 06/23/2006
Contact Information: Jennifer Wood, (202) 564-4355 / [email protected]

(Washington, D. C. – June 23, 2006) The U.S. Environmental Protection Agency released a report today by the Boutique Fuels Task Force that fulfilled the president's charge to increase cooperation among the states on fuel supply decisions and analyze the impacts of boutique fuels, or fuel blends, used by states to help meet clean air standards. According to the report, if a fuel supply disruption occurs, boutique fuel requirements make it more difficult to move gasoline supplies around the country. In addition, the report recommended careful consideration of potential legislative authority to allow for the adoption of regional clean fuel programs.
"Innovation and cooperation are vital components of the president's plan to protect our nation's energy security," said EPA Administrator Stephen L. Johnson. "In order to meet our growing energy needs, effective communication and collaboration between states and the federal government are essential. Today's report demonstrates that cooperation can benefit both our energy security and our environment."

In April, as part of a broad initiative to respond to high fuel prices, President Bush directed EPA to convene a task force of states to identify opportunities to increase cooperation on gasoline supply decisions and analyze boutique fuels. Administrator Johnson invited all 50 governors to participate and received input from non-governmental groups representing industry, public health and consumer organizations.

As the task force worked to meet its objectives, EPA was required by the Energy Policy Act of 2005 to cap the number of boutique fuels permitted for use and place additional restrictions on the growth of such fuels. Today's task force report called for conducting additional analysis of any action to further limit a state's ability to adopt boutique fuels. In addition, EPA will conduct a more comprehensive review in the coming months examining boutique fuels and other factors that affect the fuel supply and distribution system.

The report's major observations and recommendations include:

· The report confirms certain aspects of a previous 2001 EPA report. It indicates that boutique fuels continue to pose a challenge to the movement of fuel when supply disruptions occur. Natural events, like hurricanes, as well as refinery and pipeline breakdowns can cause such disruptions. EPA needed to waive fuel requirements over 30 times in 2005 alone.

· The report did not reach final conclusions regarding the precise effect of boutique fuels on the price of gasoline. Stakeholder opinions were divided on this issue. EPA's previous assessments have focused on the cost of producing fuels by refineries and have not assessed the full market price impact of boutiques. There are many factors and variables that affect the price of fuel and these factors will be studied in connection with EPA's implementation of the Energy Policy Act.