Environmental regulations have increasingly focused on mobile-source pollution and in particular on the automobile itself. More recently, focus has shifted toward the energy source used to propel vehicles. In the United States, in particular, the attainment of emissions standards at the local and regional level has led to a proliferation of special motor vehicle fuels. This has occurred because federal environmental standards must be achieved, but regional authorities are able to choose how to achieve those environmental standards. As a result, regional jurisdictions—sometimes as large as an entire state—have adopted specialized motor vehicle fuels also known as `boutique' fuels. The heterogeneity in motor fuel markets created by this proliferation of fuel types has stressed an already taxed supply infrastructure and led to generally higher and more volatile gasoline prices. In this paper we provide a brief summary overview of the North American market for motor vehicle fuels with a particular emphasis on gasoline. We execute a statistical analysis of the price effects of the proliferation of unique blends of motor fuels in the achievement of federal environmental standards. We find that the effects of adding more fuels to the supply chain increases overall fuel prices, in particular for those areas using unique gasoline blends. In addition, the proliferation of unique gasoline blends increases the likelihood of supply disruptions, particularly in cities or areas that are isolated by virtue of using an uncommon motor fuel or because they are located far from sources of supply. The higher and more volatile prices of boutique motor fuels must be balanced against the environmental benefits of cleaner burning fuels.
Pricing Incremental Reductions in Vehicular Emissions through Motor Fuel Regulation
Ninth International Conference on Applications of Advanced Technology in Transportation (AATT) ; 2006 ; Chicago, Illinois, United States
2006-08-04
Conference paper
Electronic Resource
English
Pricing Incremental Reductions in Vehicular Emissions through Motor Fuel Regulation
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