May 15, 2003

The Renewable Fuels Association (RFA) this week urged the New York state Senate to hold the line on banning the gasoline additive MTBE by the end of the year. The RFA stressed that industry participants could meet the current deadline and that delaying the ban would only serve to potentially harm drinking water supplies and place companies that have acted responsibly to prepare for the ban at an economic disadvantage.

Speaking on behalf of the RFA to the New York Senate Environmental Conservation Committee, fuels logistics expert Bob Reynolds, president of Downstream Alternatives, Inc., said, "The ethanol industry does not believe any delay of MTBE bans is necessary. Our industry stands ready to meet the ethanol supply needs of New York and other northeastern states."

Reynolds highlighted that several transportation options exist for moving ethanol from Midwest ethanol plants to New York gasoline terminals, including rail shipments, barges, and oceangoing vessels. Reynolds stated, "The transport equipment and infrastructure to ship ethanol from the Midwest to New York and other northeastern states already exists."

Although several gasoline terminals are already equipped to handle ethanol, Reynolds noted that some need modifications, such as installing blending systems and new tanks or modifying tanks and piping. "Some companies have already made the investment to transition to ethanol," Reynolds noted. Most companies "still have time" to finish all necessary modifications. However, Reynolds added, "For companies unable to complete installations, the most likely strategy would be to arrange for an ethanol throughput agreement or exchange with another terminal in their area. The point is that installing tanks and blending equipment is not the only option for the short term."

Reynolds concluded, "I would also add that virtually every analysis shows that high volumes of ethanol would be used to replace MTBE even if there is no oxygen requirement. So ethanol will be used in New York in any case. As such, the potential for any stranded investments is fairly limited."

The complete remarks can be viewed at: www.ethanolRFA.org/NYSen.RFA.pdf (PDF)