Business

Tailpipe tug-of-war

Ross Laver August 3 1998
Business

Tailpipe tug-of-war

Ross Laver August 3 1998

Tailpipe tug-of-war

Ross Laver

A year ago, after much huffing and puffing about the need to protect Canadians from “dangerous atmospheric pollutants,” then-Environment Minister Sergio Marchi

slapped a ban on the importation of the gasoline additive MMT. The noxious substance, he said, gums up the pollution control equipment in cars and poses a hazard to health and the environment. Marchi’s message to the oil industry was simple: give us clean gas or get out of town.

Good for him. But wait—it turns out that Ottawa got it wrong, at least according to Marchi’s successor in the environment portfolio. Last week, Christine Stewart announced a repeal of the ban, saying there is no proof that MMT is hazardous. According to Stewart, there isn’t even sufficient evi-

dence that it damages emission control systems.

If you’re puzzled by the government’s sudden aboutface, join the club. In fact, everything about the MMT issue is confusing, in part because all the talk about safety and the environment is—no pun intended—a smoke screen for what’s really at stake in this dispute.

Start with the oil companies. They love MMT be-

cause it’s the cheapest way to boost gasoline octane levels so as to meet modern engine requirements. Without it, the industry would have to spend between $50 million and $120 million to upgrade its refineries. If the full amount was passed on to consumers, it would result in a temporary, one-year price hike of roughly a third of a cent per litre. The Canadian Petroleum Products Institute, however, says that some of the larger refiners have already made the necessary modifications, and that competition would prevent others from raising their prices.

The auto industry is similarly focused on the bottom line. General Motors, Ford and Chrysler—together with most European and Asian carmakers—say that MMT can, over time, interfere with the computerized diagnostic systems in new cars. There are also studies suggesting that the additive can coat the tips of spark plugs and cause misfiring. When either of those problems occurs, a dashboard warning light tells the driver that the car should be serviced. So what? So the automakers are worried they

will face higher warranty repair costs. Presumably, more frequent trips to the service department would also mean fewer repeat customers.

Both the automakers and big oil, therefore, have a financial stake in this argument. So does the additive’s U.S. manufacturer, Ethyl Corp. of Richmond, Va., which forced Ottawa to rescind the ban on the grounds that it violated the North American Free Trade Agreement. Far from conceding any ill effects from MMT, it argues that the chemical actually helps the environment. That’s because, without it, oil companies have to employ a more intensive refining process that consumes slightly more crude oil to produce a given quantity of gasoline. There is also evidence that MMT reduces auto emissions of nitrogen oxides.

As you might suspect, those two factors are peripheral to Ethyl’s chief concern. For two decades, the company has been trying to convince American motorists to use MMT in their gasoline. In 1996, the company succeeded in overturning a U.S. Environmental Protection Agency ban on MMT, but the additive remains illegal in California and much of the eastern seaboard, and

the EPA continues to oppose its use. Currently, about 85 per cent of the gasoline sold in the United States is MMT-free.

Naturally, the huge and lucrative U.S. market matters a great deal more to Ethyl than does Canada. But one of the linchpins in Ethyl’s lobbying campaign south of the border is that its product has been available in Canada for 21 years with, as yet, no proven health effects. Some studies appear to show a link between long-term exposure to low levels of MMT and various nervous-system disorders, but for now the scientific evidence is inconclusive.

Yes, it’s confusing. But two things are clear. First, Canadians are being used as guinea pigs to help Ethyl make the case for MMT in other markets. Second, oil companies wouldn’t need MMT if they or their customers were prepared to make a relatively small investment for the sake of cleaner gasoline.

Come to think of it, why don’t the automakers get the ball rolling by offering to foot part of the bill?

AH the talk about safety and the environment is a smoke screen for what is reaUy at stake