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The cost of gas is about to spike in Colorado. How high will it go?

The EPA is forcing Colorado to switch to reformulated gas as ground-level ozone hits ‘severe’
A Johnson’s Corner and Sinclair gas station, seen May 20, 2024, near Johnstown. (Olivia Sun/The Colorado Sun via Report for America)

Keep an eye on gas prices in the next few weeks, Colorado, and you can watch a major policy battle play out between an extremely irritated Gov. Jared Polis and officials enforcing the federal Clean Air Act.

Colorado has a big problem with toxic ground-level ozone in the nine-county northern Front Range area that the Environmental Protection Agency has declared in “severe” violation of Clean Air Act ozone limits. When an area hits “severe,” the Clean Air Act requires all gas stations in that area to begin selling “reformulated” gas during the summer ozone season, beginning June 1.

Reformulated gas, according to the EPA, can cut back on ozone-causing emissions because it’s denser and doesn’t evaporate as quickly in hot weather. Polis argues it will shoot Colorado gas prices up by 50 cents a gallon or more. But the EPA says its studies show the impact is only a few cents.

What’s the reality? Let’s pop the hood and take a look.

Are Colorado gas prices already going up?

Yes, but.

The EPA says reformulated gas has already made its way to the pumps because of the timing of gas distribution. Colorado did have the fastest week-over-week price increase in the nation, a 16-cent jump, and is now at $3.35 a gallon.

Perspective: That’s exactly what the price was a year ago on the same day. Ten years ago at this time, says AAA Colorado’s Skyler McKinley, Front Range gas was $3.47. The current national average is $3.59.

“For several weeks, we’ve had some of the cheapest gas in the country,” McKinley said. “I suspect prices will creep up to the national average as reformulated gas filters into the system.”

Having said that, McKinley added he does not think reformulated gas will be responsible for spikes of 70 cents to a dollar this summer. So many factors can alter the price of gas from a nickel to a dollar, from hurricanes disrupting supply, to the helicopter-crash death of the Iranian president destabilizing Middle East prices, to an incident at Suncor, the only refinery in Colorado.

“You really can’t pull just one thing out,” McKinley said.

What did the Polis and EPA studies show would happen?

Polis and his staff have strenuously objected to the EPA imposing reformulated gas on Colorado, even though the EPA says the Clean Air Act doesn’t give the agency any choice. Polis says the state is doing many other things to cut into the ozone problem and consumers should not be penalized this way.

The Polis staff ran a number of scenarios for gas prices this summer, and said supply interruptions or other problems producing and delivering reformulated gas could mean 50 cent jumps attributable to the EPA decision. The EPA has cited its own studies of reformulated gas in many markets — currently about 25% of the U.S. population is required to buy reformulated gas to combat ozone in other cities — and results show only about a 3 cent per gallon increase.

The EPA says Colorado’s studies included a far broader range of scenarios, some of which the federal agency does not see as likely. EPA officials also note that other gasoline distributors have requested permits to add new infrastructure in Colorado that can handle both traditional gasoline and the reformulated version, and they will bring in supplies from out of state to compete with Suncor and hold prices down.

Did we ask the EPA for a break?

Yes, the governor has formally asked regional and national EPA officials to issue a waiver for the northern Front Range, delaying the requirement of reformulated gasoline by weeks or a year or more.

“I’m very upset,” Polis told a Colorado Sun audience at the 2024 legislative session wrapup online.

Polis argues consumer behavior will overwhelm any projected benefits of the cleaner gas. “Very unfortunate consequences, including the fact that people will simply drive a little further to get much lower-cost gas. You can go north of Fort Collins, you can go to Greeley, go to Colorado Springs,” Polis said. The extra miles will negate the reformulation gains, he said.

The EPA responds that current gasoline demand remains historically soft. Gas consumption in Colorado is still below 2016 levels, the EPA said. Colorado’s population has grown, but fewer people are commuting every day of every work week, and more electric cars in the overall state car market also cut into demand.

Why is reformulated gas better?

The EPA describes a barrel of oil as a “bucket of hydrocarbons” that are refined and split up into components ranging from very heavy waxes and lubricants, to gasoline and kerosene, to lighter-than-air gases. In summer months, normally-refined gasoline evaporates quicker at all stages of the process, from refining to storage to distribution to refueling to driving. Each step can put ozone-causing emissions into the air.

Reformulated gasoline is made with all the same equipment, but is denser and less likely to evaporate, the EPA says. The cuts to ozone emissions may not be huge, but the EPA and many environmental groups note that in the difficult battle against ozone, every part per billion trimmed can make a difference. In recent years local officials have implemented restrictions on items as obscure as lawn and garden equipment, which contribute a small but controllable few parts per billion of ozone.

What will happen next?

“The Clean Air Act does not allow the EPA to grant a waiver just on cost for reformulated gasoline,” said Region 8 EPA spokesperson Taylor Gillespie. “There has to be a supply issue.”

The EPA says it is holding Colorado’s waiver request “open” for now, and will revisit the request if there’s an emergency or a big supply chain interruption that meets the criteria. The decision can be flipped quickly — within 24 hours of an incident or supply shock, the EPA said.

Air breathers — all of us, in other words — might want to keep their eyes on the bigger prize. The reason all of this is happening with gasoline is because the Front Range produces too much toxic ozone that contributes to higher asthma rates, heart issues and other health problems.

The number of ozone alert days where we’re warned to change our behavior to stay safe has jumped sharply in recent years. The Front Range experienced its first alert this season on May 6.

The EPA’s ozone limits could get even tighter, as scientists learn more about ozone dangers. Colorado leaders negotiated a package of ozone-fighting measures in this year’s Legislature, but they also watered down the strongest recommendations from environmental groups. State regulators were criticized for approving an ozone improvement plan that they acknowledged would not meet EPA demands.

In other words, the final price of reformulated gas was not an overnight decision. Is there room in the tank for more debate?

Fill ‘er up.

The Colorado Sun is a reader-supported, nonpartisan news organization dedicated to covering Colorado issues. To learn more, go to coloradosun.com.