Move away from MTBE upsets market

As refiners replace the fuel additive methyl tert-butyl ether with ethanol this spring, many motorists are expected to face gasoline shortages and price spikes as the market adjusts to the transition. In a Feb. 22 analysis, the Energy Information Administration says changes in the gasoline supply and distribution system will be most apparent in large cities along the East Coast and in Texas, where MTBE is still widely used. EIA says U.S. ethanol capacity is "not adequate to replace the MTBE lost at this time." Domestic ethanol production currently averages 275,000 barrels per day, but EIA says another 130,000 bbl of ethanol per day may be needed to replace MTBE. "The complexity of the transition may give rise to local imbalances between supply and demand and associated price surges during the change," according to EIA. During the peak summer driving season, EIA says the tight supply situation "is not likely to ease significantly, leaving the market exposed to the increased potential for price volatility in the East Coast and Texas regions." Other areas of the country have already phased out MTBE and will not be impacted as strongly. Many states banned the additive after it contaminated local drinking-water supplies.