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The Social Costs of an MTBE Ban in California

Author

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  • Rausser, Gordon C.
  • Adams, Gregory D.
  • Montgomery, W. David
  • Smith, Anne E.

Abstract

In the early 1990s, oxygenated gasoline was hailed as a partial solution to the nation’s air quality problems. Although the large-scale use of methyl tertiary butyl ether (MTBE) as a gasoline oxygenate successfully improved air quality, it adversely impacted water quality and dramatically exposed leaking underground storage tanks. However, removing MTBE from gasoline could impose significant societal costs—in terms of both gasoline production costs and prices and possible air and water quality impacts. The analysis conducted for this report is based on a comprehensive and internally consistent cost-benefit framework and includes several cost categories largely neglected in prior MTBE analyses, including: (1) the cost to taxpayers of increased ethanol consumption; (2) increases in the cost of oil imports; (3) the effects of changes in gasoline prices on gasoline consumption and thus on automobile emissions; and (4) the potential effect of MTBE substitutes on water quality.
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Suggested Citation

  • Rausser, Gordon C. & Adams, Gregory D. & Montgomery, W. David & Smith, Anne E., 2004. "The Social Costs of an MTBE Ban in California," Research Reports 11929, University of California, Davis, Giannini Foundation.
    • Handle: RePEc:ags:dgiarr:11929
    DOI: 10.22004/ag.econ.11929
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    Cited by:

    1. Colin A. Carter & Gordon C. Rausser & Aaron Smith, 2017. "Commodity Storage and the Market Effects of Biofuel Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(4), pages 1027-1055.
    2. Colin A. Carter & Gordon C. Rausser & Aaron Smith, 2011. "Commodity Booms and Busts," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 87-118, October.

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    Keywords

    Resource /Energy Economics and Policy;

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