Why Gas Prices Could Soar

Todays top stocks to buyWhat the New EPA Rulings could mean for Americans at the Pump…

Sometimes the EPA gets on my nerves.  And right now, they’re doing it once again and causing more hardship for U.S. citizens.

In the name of health and environmental sustainability, the Environmental Protection Agency (EPA) is seeking to reduce emissions of a range of pollutants with its new Tier 3 proposal.

This includes reducing smog-forming volatile organic compounds and nitrogen oxides by 80%, establishing a 70% tighter particulate matter standard, and reducing fuel vapor emissions to near zero.  The proposal will also reduce vehicle emissions of toxic air pollutants, such as benzene and 1,3-butadiene, by up to 40 percent.

As for gasoline, the proposed standards will also reduce gasoline sulfur levels by more than 60% – down to 10 parts per million (m) in 2017.

Apparently the health benefits far outweigh the costs and they believe that by 2030, the Tier 3 standards would annually prevent:

• Between 820 and 2,400 premature deaths

• 3,200 hospital admissions and asthma-related emergency room visits

• 22,000 asthma exacerbations

• 23,000 upper and lower respiratory symptoms in children

• 1.8 million lost school days, work days and minor-restricted activities

According to the EPA press release, these are “common sense”, “affordable”, “practical”, and “sensible” standards that will “save thousands of lives and protect the most vulnerable.”  And they go on to explain the program would cost about a penny per gallon of gasoline, and about $130 per vehicle.

Sounds great doesn’t it?  I mean, who wouldn’t want this proposal to pass?

What the EPA isn’t telling you

Buried in the fine print of their “Draft Regulatory Impact Analysis: Tier 3 Motor Vehicle Emission and Fuel Standards”, are the studies on health and environmental effects associated with the pollutants.

In this section, the EPA tries to link the pollutants they’re trying to reduce with a number of adverse health problems.  They then assign one of five “weight of evidence” determinations: causal relationship, likely to be a causal relationship, suggestive of a causal relationship, inadequate to infer a causal relationship, and not likely to e a causal relationship.

The problem is – and this is from THEIR OWN research – the majority of the pollutants are only suggestive, inadequate, or not likely to be a causal relationship at all!  You can look it up yourself on the EPA website.

This means the statistics they list on premature deaths, hospital admissions, asthma, respiratory problems, and lost school and work days are based on nothing more than weak links to “harmful” pollutants.

And this is supposed to create annual monetized health benefits of between $8 and $23 billion?

Come on.

What will this really cost us?

Of course, I’m not the only one calling the EPA out on this issue.

Oil-industry officials and Republicans in Congress criticized the proposal as expensive and onerous.

According to Bob Greco of the American Petroleum Institute, the standards would raise gasoline production costs by as much as 9 cents a gallon.  Other proposed EPA regulations, including a mandate for ethanol use, would also boost production costs and would be passed along to motorists as well.

The regulations could put upward pressure on gasoline prices.  And new rules will require an additional $10 billion in infrastructure investment and $2.4 billion in annual operating costs, according to the American Fuel & Petrochemical Manufacturers.

“The ignored consequences of Tier 3 include importing more foreign energy, increasing our trade deficit, and reducing our energy security,” Senator David Vitter of Louisiana, the top Republican on the Environment and Public Works Committee, said in a statement.

Yet despite all this criticism, the likelihood of the Tier 3 proposal becoming adopted is all but certain.

When it comes to issues relating to health and the environment, people often side with their emotions and don’t look at the cold hard facts.

How investors can take advantage…

Contrary to what the EPA says, the big winners in all of this are not the average American citizen.  Sorry, but health benefits of $8 to $23 billion for a population of 313 million people is not my idea of effective.

No, the big winners in all of this are of course the environmentalists.  These new standards look great on paper and it makes it look like they’re able to do something about climate change

Of course, this also helps the Obama administration take some credit for being champions for a greener future.

But here’s my take on the issue.

I believe President Obama – through the EPA – is trying to build up as much goodwill with the environmentalists as he can before he makes the all-important decision… of approving the Keystone XL pipeline.

If my hunch is correct, then investors should brace themselves for a windfall of profits in the energy sector in the months and years ahead.

TransCanada Corporation (NYSE:TRP) would be an excellent way to play the impending approval.  Refiners such as Phillips 66 (NYSE:PSX) and Tesoro Corporation (NYSE:TSO) would be great as well.

Yours in profit,
Todays top stocks to buy
John Holt
for Top Stock Millionaire

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