In 1997, we fully supported the Commission's testimony before the legislature that a ban on the use of MTBE would have a catastrophic effect on California's economy. Your analysis bears that out. Decreasing the supply of gasoline by as much as 40 percent would quickly grind the state's economy to a halt. A phase out of MTBE would have some additional real world impacts that we would like to bring to your attention for consideration in the Commission's final report. To begin, while the Commission considered such alternative oxygenates as ETBE, TAME, and TBA, unfortunately these products are really not commercially viable at this time.
Ethanol is the only alternative that has a demonstrated track record in the marketplace.
In considering the economic impact of the use of ethanol, your study failed to discuss the effect of the federal ethanol tax subsidy. Ethanol receives a federal excise tax subsidy of 54 cents per gallon. This translates into an annual demand of 1.15 billion to 1.2 billion gallons of ethanol each year. The widespread use of ethanol could place as much as one-quarter of this funding in direct jeopardy. Clearly, any loss in federal highway funding will exacerbate this problem.