The shares of a number of refinery companies sank Tuesday on the costs they could pay to comply with proposed changes to gasoline standards.
The Obama administration wants to reduce the amount of sulfur in gasoline and tighten auto emission standards to reduce pollution. The Environmental Protection Agency said Friday that the proposal would raise gasoline prices by less than a penny a gallon and add about $130 to the price of new vehicles, beginning in 2025.
Valero Energy Corp. spokesman Bill Day said Tuesday that the company expects to spend $300 million to $400 million building new equipment and expanding existing facilities to meet the new standards. Valero also expects spend more each year on operations to support these new processes, but exact costs have yet to be determined.
Day said that Valero does not plan to bear the costs alone and will pass them along to drivers at the pump.
Day's comments were first reported in the Wall Street Journal.
The EPA predicts $7 in health benefits for every dollar spent to implement the new rules.
The proposal has been praised by environmentalists and health advocates, as well as automakers, who say it will help the U.S. catch up with the cleaner fuels used in other nations. Opponents say gasoline prices are stubbornly high already and Americans shouldn't have to pay more. The oil industry, Republicans and some Democrats had urged the EPA to hold off on proposing the tighter regulations.
The EPA must hold public hearings before finalizing the rules, which it plans to take effect in 2017.
In afternoon trading Valero fell $2.56, or 5.7 percent, to $42.41. CVR Energy fell $2.70, or 5.2 percent, to $49.18. Marathon Petroleum Corp. dropped $4.40, or 4.9 percent, to $85.43. Tesoro Corp. fell $1.82, or 3.2 percent, to $55.03. Western Refining Inc. lost $2.49, or 7.1 percent, to $32.50.