"This ratcheting down of allowable sulfur adds to costs and also strains the refining system," Lundberg said. "In 2006, the EPA could well cost gasoline consumers more than Hurricane Katrina did."
Adding to market pressures will be a government-mandated increase in the production of gasoline-additive ethanol, Lundberg said. Ethanol, which is made from fermented corn or other starchy grains, is mixed with gasoline to stretch available fuel supplies.
While touted as a greener fuel additive, Lundberg said the government requirement translates into an ethanol demand increase of around 5 percent compared with this year, "enough to wreak some havoc in the market."
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