Oil industry, lawmakers say EPA fuel rule would hike prices at the pump

Oil industry representatives and congressional Republicans accused the Obama administration Friday of effectively jacking up gas prices across the country after the Environmental Protection Agency unveiled a plan to clean up gasoline and automobile emissions.

The proposal, released Friday morning, aims to reduce sulfur in gasoline by more than 60 percent in 2017. The agency claimed the change would save lives and cut down significantly on respiratory ailments by making the air cleaner.

But critics questioned those claims, and said the plan would impose higher gas prices on hard-hit families.

"Increases in gas prices disproportionately hurt the nation's most vulnerable individuals and families -- with $4 dollar a gallon gas the norm in many parts of the country, we cannot afford policies that knowingly raises gas prices," Energy and Commerce Committee Chairman Fred Upton, R-Mich., said in a statement. "The Obama administration cannot be more out of touch. With hard-pressed families already struggling to afford each fill-up, Congress needs to take a hard look at any new EPA regulation that may raise the price at the pump."

The oil industry pointed to a study that found the changes could increase the cost of gasoline by up to 9 cents per gallon. The study projected an annual compliance cost of $2.4 billion for the industry.

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    "There is a tsunami of federal regulations coming out of the EPA that could put upward pressure on gasoline prices," American Petroleum Institute official Bob Greco said. The industry, as well as some in Congress, had urged a delay in the proposed rule.

    The EPA estimates a more modest impact. They say it will increase gas prices by less than a penny per gallon and add $130 to the cost of a vehicle in 2025.

    The agency argues the plan will yield billions of dollars in health benefits by slashing smog- and soot-forming pollution come 2030. The EPA projected by then, the overall changes to fuels and cars would prevent up to 2,400 premature deaths and 23,000 cases of respiratory ailments in children.

    For states, the regulation will make it easier to comply with health-based standards for the main ingredient in smog and soot. For auto makers, the regulation allows them to sell the same autos in all 50 states.

    Environmentalists, meanwhile, hailed the proposal as potentially the most significant in President Obama's second term.

    The Obama administration has already moved to clean up motor vehicles by adopting rules that will double fuel efficiency and putting in place the first-ever standards to reduce the pollution blamed for global warming from cars and trucks.

    "We know of no other air pollution control strategy that can achieve such substantial, cost-effective and immediate emission reductions," said Bill Becker, executive director of the National Association of Clean Air Agencies. Becker said the rule would reduce pollution equal to taking 33 million cars off the road.

    A senior administration official said Thursday that only 16 of 111 refineries would need to invest in major equipment to meet the new standards, which could be final by the end of this year. Of the remaining refineries, 29 already are meeting the standards because they are selling cleaner fuel in California or other countries, and 66 would have to make modifications.

    The Associated Press contributed to this report.