United States
                         Environmental Protection
                         Agency
                        Office Of Solid Waste And
                        Emergency Response
                        (5401G)
     EPA510-F-97-016
       Januaary 1998
www.epa.gov/OUST/mtbe
xvEPA
                         Office Of Underground Storage Tanks
MTBE
Fact Sheet #3
                         Use And  Distribution  Of
                         MTBE And  Ethanol
                         Background

                         Methyl tertiary-butyl ether (MTBE) and
                         ethanol are the most common oxy-
                         genates used to meet the requirements
                         for the U.S. EPA's Reformulated Gas-
                         oline (RFG) and Oxygenated Fuel
                         (Oxyfuel) Programs. Both additives
                         have been used in gasoline in the United
                         States since 1979.  MTBE was
                         originally added as an octane-enhancing
                         replacement for lead. Eth-anol was
                         originally introduced to make gasohol
                         (i.e., 10-percent ethanol in gasoline) as
                         part of a program to reduce reliance on
                         oil imports.

                         Summary Of Two U.S.
                         EPA
                         Clean Air Programs

                         The Oxyfuel and RFG Programs were
                         initiated by the U.S. EPA in  1992 and
                         1995, respectively, to meet require-
                         ments of the 1990 Clean Air Act
                         Amendments.  The Oxyfuel Program
                         requires the use of gasoline with 2.7-
                         percent oxygen (by weight) in areas with
                         high levels of carbon monoxide during
                         the fall and winter. When MTBE is
                         used to meet this require-ment, it is used
                         at a concentration of 15 percent (by
                               volume) in gasoline. Be-cause ethanol
                               has a higher oxygen content, it can meet
                               this requirement with a concentration of
                               7.3 percent (by volume). The RFG
                               Program re-quires 2.0-percent oxygen
                               (by weight) throughout the year in the
                               most pollu-ted metropolitan areas.
                               MTBE meets this level with an 11-
                               percent (by volume) concentration, and
                               ethanol can be used with a 5.4-percent
                               (by volume) concentration.

                               Extent Of MTBE And
                               Ethanol Use In The  United
                               States

                               Approximately 30 percent of all gaso-
                               line in the United States contains fuel
                               oxygenates for compliance with RFG
                               requirements. An additional 4 percent is
                               used for compliance with Oxyfuel
                               requirements. MTBE, which is the most
                               common fuel oxygenate, is used in more
                               than 80 percent of oxygenated fuels.
                               Since 1993, MTBE has been the second
                               most produced organic chem-ical
                               manufactured in the United States.
                               Ethanol, which is the second most
                               common fuel oxygenate, is used in about
                               15 percent of the oxygenated fuels.
                               Other oxygenates, which consti-tute the
                               remaining 5 percent of the market,
       January 1998
                         MTBEl Fact Sheet #3:  Use and Distribution

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                      include tertiary amyl methyl ether
                      (TAME), ethyl tertiary butyl ether
                      (ETBE), di-isopropyl ether (DIPE), and
                      tertiary butyl alcohol (TEA).

                      In additional to its use as a fuel oxy-
                      genate, MTBE is widely used for octane
                      enhancement in mid- and high-octane
                      blended conventional gasoline, typically
                      at concentrations ranging from 2 to 8
                      percent (by volume). It may also be
                      found in regular grade gasoline at lower
                      concentrations. The Oxygenated Fuels
                      Association esti-mates that about 70
                      percent of all gasoline in the United
                      States contains MTBE at varying
                      concentrations. As a consequence of the
                      wide-spread use of oxygenated fuels,
                      underground storage tank regulators
                      cannot assume that the gasoline in their
                      region is free of MTBE just because the
                      tank is located outside an RFG/Oxyfuel
                      area.

                      Although it is difficult to predict the
                      type of oxygenate used in a specific
                      gasoline, there are general trends in their
                      use. Ethanol is used primarily during
                      the winter months to meet the
                      requirements of the Oxyfuel Program.
                      MTBE is used throughout the year, but
                      its use increases in summer months as it
                      replaces ethanol in regulated areas.
                      Three major factors have influenced how
                      these two fuel  oxygenates are used in
                      petroleum products.

                      Lower Vapor Pressure-MTBE

                      In addition to requiring that fuels burn
                      cleaner,  EPA requires areas with high
                      levels of smog (including but not lim-
                      ited to RFG areas) to reduce the vapor
                      pressure  of gasoline in the summer
                      months in order to decrease the volatil-
                      ization of petroleum constituents at
                      storage facilities and during fuel trans-
fer. Because MTBE-blended gasoline
has a lower vapor pressure than ethanol-
blended gasoline, MTBE is the preferred
oxygenate in warm weather.

Convenience-MTBE

The cost of transportation and the con-
venience of use favors MTBE over
ethanol. Because MTBE is more com-
patible with gasoline, it can be blended
at the refinery and distributed with
gasoline through pipelines. Ethanol, on
the other hand, must be shipped
separately from gasoline and added at
the distribution terminal soon before
use. If ethanol-blended gasoline is ex-
posed to water or even water vapor (as
in pipelines), ethanol will bring the
water into solution and make the gaso-
line unusable.  In addition, if ethanol-
blended gasoline is stored for an exten-
ded period, the ethanol will begin to
separate from the gasoline. As a re-suit,
ethanol is often manufactured close to
the point of use or shipped by rail,
increasing the cost of its use.

Tax Incentives-Ethanol

Market price and tax incentives play a
major role in the use of MTBE and
ethanol. Although the market price of
MTBE is typically lower than that of
ethanol, when the government sub-sidies
are included, ethanol often costs less.
The federal government provides a
subsidy of $0.54 per gallon of ethan-ol
when it is blended in gasoline at
concentrations between 5.4 percent and
10 percent (by volume). Further-more,
12 states (Alaska, Connecticut, Hawaii,
Iowa, Illinois, Kansas, Minne-sota,
Missouri, North Dakota, Nebras-ka,
Ohio, and South Dakota) have additional
incentives for ethanol production and
use, making it even more competitive for
these locations. Specific price
MTBE Fact Sheet #3: Use and Distribution
                      January 1998

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                      information for MTBE and ethanol,
                      including the effect of federal tax
                      subsidies, is provided in Exhibit 1.

                      Additional Distribution
                      Factor

                      Areas that are not required to use
                      RFG/Oxyfuel may still receive these
                      fuels on occasion if they are near
                      RFG/Oxy-fuel areas because of the
                      complexity and imperfections of
                      gasoline distribution systems. This
                      situation, called "spillover," is most
                      likely to occur when there is a shortage
                      of non-oxygenated fuel and a surplus of
                      oxygenated fuel. The petroleum
                      industry tries to avoid this situation
                      because RFG/Oxyfuel is more expensive
                      to produce than conventional fuel.
                      There are no accurate measurements of
                      how often this situation occurs, but it
                      probably
       accounts for less than 10 percent of total
       RFG/Oxyfuel sales

       Conclusion

       MTBE is preferred by the petroleum
       refinery industry over ethanol for octane
       enhancement and RFG (2.0 per-cent
       oxygen, all year) because it is less
       expensive, is easier to use, and creates a
       gasoline with a lower vapor pressure.
       Although MTBE is also used in win-ter
       months, ethanol is commonly used in
       Oxyfuel (2.7-percent oxygen in the
       fall/winter months) because govern-
       ment subsidies make it price competi-
       tive and because gasoline volatility is
       not a major concern in cold weather.
       Although these trends in the use and
       distribution of oxygenated fuels are
       useful in helping to determine what type
       of additive to expect in a region, they are
       not predictive. MTBE may be found in
       new or old releases in virtually all areas
       of the United States.
                           Exhibit I.  Price Ranges  For MTBE And Ethanol1
                                                     Ethanol Without Subsidy
                                                                Ethanol With Federal Subsidy
                                     1 January 1995 through October 1997.
January 1998
MTBSFact Sheet #3:  Use and Distribution

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