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CNN Live At Daybreak

Representatives to Introduce Legislation to Reduce Number of Mandated Gasolines

Aired June 20, 2001 - 07:20   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: On Capitol Hill today, two House members will introduce legislation aimed at reducing the number of so-called mandated gasolines.

As CNN's Brooks Jackson reports, those mandated gasolines affect both price and supply.

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT (voice-over): Saint Louis, Missouri, where clean-burning reformulated gasoline is required. But just across the Mississippi River, in East Saint Louis, Illinois, another special formula of gasoline is required, a so-called boutique blend, not quite as clean. A few miles out of town, beyond this congestion, yet a third type of gasoline is in use: plain old conventional gasoline. One metropolitan area, three different fuels. Station owners say that affects supply and price.

CHRIS KEMPH, CFM CONVENIENT FOOD MART: The price inevitably goes up. There are just times where you have the right product in the wrong location, and the gasoline you have access to you can't put in your tank.

BROOKS: And on the other side of Missouri, Kansas City uses yet another blend of gasoline. One fuel required in Chicago, a different one in Detroit. One fuel in Louisville, another just across the Ohio River, in southern Indiana -- fourteen different gasoline blends in use across the USA. The map of boutique fuels looks almost like the former Yugoslavia.

And balkanization of gasoline markets is bad for consumers, according to the American Automobile Association.

GEOFF SUNDSTROM, AMERICAN AUTOMOBILE ASSOCIATION: We think it's had a huge effect. In fact, we think we think that it's the primary cause of the higher prices.

BROOKS (on camera): It's simple economics. If this ice cream store only had to carry vanilla, they'd always have tons of the stuff. But having to carry more than a dozen flavors in the same limited freezer space greatly increases the odds of running short of one or two of them. (voice-over): In fact, this store was out of one flavor. The same applies to gasoline. Wholesale prices of reformulated gas shot up last summer when a pipeline broke, cutting Saint Louis' supply.

MARK MARTINOVICH, WALLIS COMPANIES, INC.: You couldn't go over to Kansas City and pick up fuel or go over east.

BROOKS: Many suspect a conspiracy behind gasoline price spikes. The AAA sees it differently.

SUNDSTROM: But our view is that you don't need a conspiracy when the government has created a protected market for a single company

BROOKS: Example: station owners say 80 percent of Louisville's reformulated gasoline now comes from a single refiner. The Bush administration has ordered a study; the Senate Energy Committee plans hearings on Thursday; and in the House, Missouri Congressman Roy Blunt has a bill aimed at cutting down the number of different fuels to only three.

REP. ROY BLUNT (R), MISSOURI: I think retailers will be for it. I think consumers will be for it. I think people who look at solving the long-term energy problem in the country will be for it.

BROOKS: Clean-burning fuels have removed thousands of tons of pollutants from the air, but the proliferation of boutique fuels is also removing millions of dollars from motorists' pockets.

Brooks Jackson, CNN, Saint Louis, Missouri.

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