By James Pilcher
The Cincinnati Enquirer

Bob Cook, a driver with Lykins Transportation, prepares to fill up the tanks at the Mount Zion BP Food Mart. Kentucky stations are now selling summer formula gas. The Cincinnati Enquirer/MEGGAN BOOKER

Northern Kentucky gas stations last week began selling an even more environmentally friendly version of fuel, right in the middle of the highest prices ever.

With tougher federal clean air rules that took effect this month, there's a chance that gas could be made even cleaner - but also more expensive and even more subject to price spikes.

The federal rules could force the cleaner gas to be sold across the river in Ohio, experts and state environmental regulators say. That could create a regional standard but mean higher prices throughout the area.

"Nobody has the answer yet, but it definitely will be the states' decision on which way to go," says Joanne Shore, a senior analyst with the federal Energy Information Administration. "Kentucky is probably a very good example of what the rest of the country is dealing with. And it will be a tradeoff between environmental benefit and higher cost."

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• About reformulated gas

In a summer when gas prices are a topic in the presidential campaign, so is reformulated gas.

There are 17 different blends required in different areas. Some are cleaner burning; some just reduce the amount of gas that's evaporated (triggering the creation of ozone pollution); some do both.

Many in the oil and gas industry have said this "balkanization" of the refining industry has led to gasoline price spikes, including the ones in spring 2000 and the summer of 2001.

"Whenever there is an unexpected event in the process, such as a pipeline break or a refinery fire, that's when we see the price fluctuations," says Marc Meteyer, fuels expert with the American Petroleum Institute, which represents large oil companies in Washington.

To cut the risk of local price spikes, Commerce Secretary Don Evans late last month said the Bush administration was considering reducing the amount of "boutique" fuels. That's a position shared by Sen. John Kerry, D-Mass., his party's presumptive presidential candidate.

Tripartite approach

To meet previous standards for reducing ozone, a colorless and odorless gas that is a known lung irritant, Kentucky chose to use the federal standard formula for reformulated gas, along with vehicle emissions testing (E-check) and vapor controls on fuel pumps.

Gas stations in Boone, Campbell and Kenton counties, as well as counties in the Louisville area, began selling the different gas in summer 1995.

The gas produces lower emissions from vehicles, a primary ingredient in making ozone, year round. But in the summer, that gas must also not evaporate as easily. Refineries started selling the summer formula on May 1 to dealers to ensure that all retail outlets were selling it by the deadline of June 1. It is required to stay in the pumps through Labor Day.

According to estimates by the Kentucky Division for Air Quality, there would be 0.83 tons more emissions per day across Northern Kentucky in the summer if reformulated gas were not used. With everything in place, including E-check, the gas and the vapor controls, emissions are estimated to be just over 9 tons a day in the summer.

"That is a significant reduction from reformulated gas," says Lona Brewer, program planning and administration branch manager for the division.

Still, the gas has proven to be more expensive than the standard gas sold in Ohio. An Enquirer analysis of five years of daily prices in Northern Kentucky and Southwest Ohio found that gas was about a nickel cheaper north of the river.

Ky. E-Check history?

Many Northern Kentucky residents, including retired engineer Bob Meyer of Burlington, complain that the reformulated gas affects their car's performance.

"I drive 12 miles each way to go to Indiana to avoid buying it," says Meyer. "It cuts my mileage in half. It might burn cleaner, but I burn a heck of a lot more of it because it is not as efficient; so therefore I question its effectiveness."

Making the situation more complicated is the fact that Kentucky is also giving serious consideration to eliminating E-check. Brewer's department is under orders of the General Assembly to come up with a plan that would reduce emissions without the controversial tailpipe-testing program. Brewer acknowledges that could mean the state could look at a more stringent formula of reformulated gas.

"But we are looking at all our options, and we are all still waiting on further guidance from the federal EPA (Environmental Protection Agency)," Brewer says.

If Kentucky were to go to a different formula and vary from the federal standard, it would be joining into an already fractured supply chain.

Regional disparities

Ohio, on the other hand, could consider reformulated gas as well. The EPA has said Ohio cannot get rid of its E-check program because it failed to meet the previous clean air standards.

The region's main gas supplier, Marathon Ashland Petroleum LLC, operates two refineries within driving distance. Company officials would not comment on whether it could make enough reformulated gas for all of Greater Cincinnati.

"That could make it easier for this area; but if I had my way, I would hope the entire state would go to" reformulated gas, said Jeff Lykins, president of Milford-based Lykins Oil Co., which operates eight convenience stores and supplies gas to approximately 150 stations throughout the area.

"Anytime you get into a regionalized situation, it screws up the supply system and the pricing," says Lykins, who also is chairman of the Petroleum Marketers Association of America.

E-mail jpilcher@enquirer.com