"Where we send our gasoline is going to depend on the different opportunities, and where we get the best economic return," Parker said. With New York and Connecticut banning MTBE, she added, "it certainly gives us more options."
California's fate depends, to some extent, on how many East Coast refineries make upgrades in time to send the ethanol blend to New York and Connecticut in 2004 and how smoothly the switch goes, said the EIA's Shore.
"The biggest single factor is when the flag drops, who is there to supply that [East Coast] market," Shore said. "If they come up short in New York and Connecticut, there may be more pull on supplies that have gone to California in the past."
California, now the largest single market for fuel ethanol, was the biggest consumer of MTBE until state officials decided to ban the additive because of a growing problem with water contamination. Oil companies say they have phased out use of MTBE ahead of the year-end deadline.
The last four California refineries to make the change -- ChevronTexaco Corp.'s Richmond refinery, Tesoro Petroleum Corp.'s Martinez plant and Valero Energy Corp. refineries in Wilmington and Benicia -- made their last batches of MTBE gasoline in early and mid-November, according to the companies. Pipeline and fuel terminal operator Kinder Morgan Energy Partners said last week that it has completed the changeover in its terminals and tanks.
Over time, more refiners will adjust to the new fuel landscape and boost production of the cleaner fuel blends to meet market demand, just as ethanol producers have ramped up new plants to serve states with new MTBE bans, regulators and others say.
"People have to live through the transition, which is hard to do," said the EIA's Shore, "but then things tend to settle down."
