The Alliance of Automobile Manufacturers (the Alliance) retained MathPro Inc. to analyze the technical and economic effects of a contemplated new federal standard for a national “clean gasoline” (NCG) for use throughout the United States (ex California). NCG would be a cleaner burning gasoline than either CG or low-RVP gasoline. The NCG standard would augment the federal standard for reformulated gasoline, and NCG would replace all special gasolines (“boutique fuels”) and conventional gasoline.

The contemplated NCG program would phase in over time. It would have higher refining costs, with the magnitude of the cost increase depending on the NCG standard and its volume share of the U.S. gasoline pool.

MathPro analyzed the refining economics of the proposed NCG standard at each step in an assumed phase-in sequence by means of regional refinery LP modeling, using our proprietary refinery modeling system. In particular, we applied three models, representing aggregate refining operations in PADD 1, PADD 2, and PADD 3, respectively. The analysis represented ethanol use at consistent with national E10 (that is, all U.S. gasoline ethanol blended at 10 vol%).

The refining analysis produced estimates of

• The average refining cost of the proposed NCG standard, by PADD, in ¢/gal of NCG and billions of dollars of refinery investment, at each stage of the assumed NCG phase-in sequence; and


• The effects on the average refining cost of NCG of changes in the average price of crude oil, for crude oil prices ranging from $50/Bbl to $125/Bbl.