October 24, 2000

The ethanol industry wants someone to step forward from within the oil industry to stop the use of toxic MTBE in northern California. MTBE is the oxygenate of choice in southern California, but – excepting the Sacramento region – northern California has no requirement for an oxygenate, like MTBE, in gasoline. MTBE has been found in numerous California water systems and has caused major drinking water problems at Santa Monica and Lake Tahoe.

"An oil industry leader needs to step up and do what's right," said Eric Vaughn, president of the Renewable Fuels Association (RFA). "Northern California, outside of Sacramento, is needlessly using over 400 million gallons of MTBE, the toxic water contaminant, this year. Northern California should be MTBE free by Jan.1, 2001. It's the right thing to do – for consumers, for the environment, and even for the oil company's bottom line. The ethanol industry pledges today to work with oil company leaders to ensure 400 million gallons of clean, renewable ethanol are available to replace MTBE for the year 2001. The time to start is now. The place to start is northern California. A leader needs to step forward."

Northern California (outside of Sacramento) represents about 4.5 billion gallons of the more than 14 billion gallon California market. The most recent California Energy Commission quarterly report on MTBE showed MTBE use increasing throughout California during the second quarter of 2000 and up 14% in northern California where there is no requirement to use the gasoline additive.

RFA says ethanol, a safe, low-cost gasoline additive, can fill any void resulting from the removal of MTBE from northern California's gasoline. Meanwhile, according to the U.S. Energy Information Agency, MTBE production is at record-breaking levels this year.

"The ethanol industry has millions of gallons of ethanol sitting in California today just waiting to be used," said Vaughn. "Ethanol is higher octane than MTBE. Ethanol will preserve the clean air benefits of MTBE without polluting your water. Ethanol costs less in California than MTBE. Ethanol is blended at up to 10 percent with gasoline after the refinery process. Therefore, blending ethanol maintains gasoline supplies and eases the burden on California's overstretched refining sector. Because ethanol is produced domestically, not imported like most of the MTBE, it creates American jobs and enhances U.S. energy security."

According to Octane Week, a publication focused on gasoline components like MTBE and ethanol, the current Gulf Coast price for MTBE is $1.12 per gallon, while the current Gulf Coast net price for ethanol is $0.86 per gallon. The California Energy Commission has studied the potential for ethanol production in California and estimates as much as 3 billion gallons per year could be produced.

"Switching to ethanol will save consumers money, save the quality of California drinking water, and create thousands of California jobs," said Vaughn. "Eliminating MTBE from northern California is the right this to do. The ethanol industry stands ready to help an oil industry leader make this a reality."

Vaughn says ethanol production is at record levels in 2000 and is expected to hit 1.7 billion gallons by the end of the year. Numerous authoritative studies have determined the ethanol industry can easily expand to meet California's demand for a safe replacement for MTBE. Further expert studies concluded that transporting ethanol to California from the Midwest would not be a constraint while ethanol production within California is expanded.