New EPA Rules May Mean Higher Fuel Costs
Joel A. Herman
The Environmental Protection Agency (EPA) has moved to reduce sulfur levels in the air by increasing emissions and gasoline standards. But according to some estimates, the new rules may mean almost a dime more per gallon of gasoline, an expensive proposition for distribution companies.
The rule changes, proposed in March of this year, and still under review by regulators as of this writing, would set reduced emissions levels for four separate categories starting in 2017: Passenger cars, light-duty trucks, medium-duty passenger vehicles and heavy-duty vehicles. The EPA estimates that the new standards will raise gasoline rates in the United States by one cent per gallon and $130 per vehicle. In addition, the EPA puts the overall price tag of the program for businesses and consumers at $3.4 billion by 2030.
The American Petroleum Institute (API) and other trade associations claim that the EPA is overstating its case. These groups argue that the regulators are vastly underestimating how expensive the new rules will be for businesses and consumers, while doing little to help the environment. API research suggests the cost of the new rules may increase the price of a gallon of gas by as much as nine cents. Plus, the new rules would require $10 billion in additional capital investments to comply with the law, as well as an additional $2.4 billion per year of ongoing costs to meet the new requirements.
Whatever the costs of these new EPA regulations, it is safe to assume that increases will be passed on to the end users, consumers and businesses. Businesses using a significant amount of fuel in their production, shipping or delivery processes need to be aware of theses potential adjustments when planning for 2014.
If you have additional questions about best practices for budgeting for higher fuel costs, contact Joel Herman at [email protected] or 312.670.7444.