A phase out of additive MTBE in US gasoline, which may occur
following the oil industry's inability to get liability protection
for the product in the new
energy bill, could cause
gasoline prices to rise next summer, the
Energy Information Administration
said Aug 9.
"There could be transition pressure on gasoline prices from the
supply loss next summer, depending on the number of suppliers that
eliminate their use of MTBE," EIA said in its
Short Term Energy Outlook
for August.
The EIA also said it sees signs of strengthening US petroleum
demand, and expects use to jump 360,000 b/d in the second half of
the year compared with the same period of 2004.
Several companies, including
Valero Energy, have said
they would stop using MTBE, an oxygenate, in gasoline soon due to
increasing liability concerns and the ability to use non-oxygenated
additives, EIA said.
The agency, the statistical arm of the US
Department of Energy,
estimated 150,000 b/d of MTBE now used in gasoline will have to be
replaced if all companies eliminate the additive. Such widespread
elimination of MTBE is "likely," EIA said, given the "increasing
numbers of suppliers demanding an MTBE-free distribution system."
The EIA also said it sees signs of strengthening US petroleum
demand, and expects use to jump 360,000 b/d in the second half of
the year compared with the same period of 2004.
"Despite the low average growth rate for the first half of 2005,
US oil demand during the past two months has shown some signs of
renewed strength," EIA commented. The agency said that in June and
July, total US demand grew by 100,000 b/d compared with a year ago,
with "similar growth appearing in the gasoline market and even more
robust growth [about 180,000 b/d] in distillate fuel oil."
EIA said the projected second-half demand growth increase would
likely be driven by a continuation--or even an acceleration--of the
strength in gasoline demand seen since May, continued increases in
jet fuel demand and weather-related increases in heating oil in the
fourth quarter.
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