New limits on the amount of lead in gasoline may drive up prices for regular automobile fuel as oil companies substitute more costly ethanol as an additive, an industry analyst in Los Angeles said Sunday.
The new limits on lead content, set by the Environmental Protection Agency as a way to reduce smog, take effect Jan. 1.
The change in the amount of lead allowed in gasoline could eventually bring the price of regular up to that of unleaded, oil industry analyst Dan Lundberg said.
Under the new regulations, oil companies can legally add no more than 0.1 gram of lead to each gallon of gasoline. Current regulations allow 0.5 gram per gallon, and six months ago the limit was 1.1 grams per gallon.
Lundberg said in his weekly newsletter that, although the use of ethanol is encouraged by state and federal tax subsidies, prices are still expected to climb. Ethanol is a "convenient and much-used substitute" for lead to boost octane ratings and enhance performance of gasoline, but it is more expensive.
"The substitution of lead by alcohol has become economical," Lundberg said. "Subsidies made it feasible. The farmer gets only a very small portion of this. It is the oil refiners, the producer-distillers of alcohol that get the tax breaks."
Many farmers have supported the use of ethanol, made from fermented corn, because it gives them a new market to sell their corn.
Ethanol-blended gasoline now accounts for 6.9% of all motor fuel used in the United States, Lundberg said, up from 0.71% in 1981.
Lundberg said he believed that all gasoline will be unleaded by 1988.