NEW YORK -- The Colonial Pipeline will continue to ship gasoline containing methyl tertiary butyl ether (MTBE) on a case-by-case basis this spring, delaying the plan to eliminate the additive from its system.

The Energy Intelligence Group's newsletter Oil Daily reports that, according to Reuters, Colonial Pipeline's move to continue MTBE shipments comes at the request of oil companies. As reported in NACS Daily's Feb. 24 Washington Report, Colonial was planning to discontinue shipments of the additive in mid-March.  

In a statement to shippers, reports Oil Daily, "Colonial has been asked if it would be possible to provide additional operational flexibility for continuing shipments of products with MTBE on Colonial. Colonial has studied this issue at length and determined that, subject to operational constraints, Colonial will continue to permit the shipment of [reformulated gasoline] with MTBE when reasonably possible."

On Feb. 22, the U.S. Energy Information Administration (EIA) released a report that analyzes the market implications of several refineries that have opted to transition away from MTBE this year.

According to the EIA, "Overall, the complexity of the transition away from MTBE-blended RFG may give rise to local imbalances between supply and demand and associated price surges during the change. As the summer progresses and demand grows, the tight supply situation is not likely to ease significantly, leaving the market exposed to the increased potential for price volatility in the East Coast and Texas RFG regions."

NACS Daily reported that refiners are facing the phase out of MTBE, noting that moving from MTBE to ethanol as the main oxygenate in gasoline will cause a drop in production capacity "because of the unique characteristics of ethanol, a renewable fuel which evaporates easily, versus MTBE, a petroleum-derived fuel additive."

NACS Daily's Washington Report featured an in-depth look at the potential problems associated with establishing an ethanol mandate, as provided in the Energy Policy Act of 2005, as well as key reasons cited by EIA--of which most have also been expressed by NACS and industry allies--that identify why market problems could develop.

To read Friday's Washington Report, click here.