The US Environmental Protection Agency announced Oct. 15 that it has ruled to move away from the Volatile Organic Compound performance standard to measure emissions for reformulated gasoline and shift to using a 7.4 RVP per-gallon maximum standard, reshaping the summer gasoline blending pool for the summer of 2021.
The change will rely on gasoline volatility control by limiting RVP at 7.4 psi as the measurement of compliance for reformulated gasoline along with sulfur and benzene measurements, in accordance with existing Tier 2 and 3 regulations, cutting the 11 parameters currently evaluated by the EPA to three.
The change is not expected to lower the price of RBOB next summer, as the rules of supply and demand will keep prices relatively stable for gasoline as blendstock prices adjust depending on what is being pulled into the gasoline pool.
US Gulf Coast naphtha and blendstocks market sources said the change will be bullish for naphtha, but bearish for alkylate. By getting rid of the aromatics specification on RBOB, more N+A naphtha and reformate barrels will be able to dive into the gasoline pool next summer – leaving some room for other blendstocks that are usually not blended into summer gasoline, like butane.
Colonial Pipeline previously announced proposed changes to specifications of summer regular and premium RBOB in a shipper's notice on Sept. 30 – giving the market a sense of confidence that the changes would take place.
The Colonial Pipeline's proposed change in specification, which would go into effect on Jan. 1, 2021, would mirror the EPA proposal.
According to the shipping note, Colonial Pipeline will continue to ship all the current gasoline grades during the winter and "grades will not be commingled".
Although the EPA change considers necessary segregation of reformulated from conventional grades in the summer, it says this will no longer be required during the winter season along the whole distribution process, as both products would be alike.
Colonial Pipeline said it continues monitoring the implementation of the EPA's proposed regulatory streamlining changes and potential adjustments to Colonial operations.
The current reformulated gasoline program, which uses the Complex Model, was introduced by the EPA in 1990 as a measure to control pollution in metropolitan areas by measuring 11 gasoline parameters to evaluate expected evaporative emissions, exhaust emissions and toxins released into the environment.
The EPA expects savings in administrative costs of $32.9 million per year for the industry from the change.
