Localizing Environmental Regulation: The Case of Boutique Fuels

The Clean Air Act has authorized an array of fuel regulations to reduce the precursors to ambient ozone pollution, among other pollutants. With the emergence of stringent fuel regulations for the most pollution-intensive cities, and the opportunity for states to adopt fuel content regulations, the U.S. gasoline market has evolved over the past three decades to address local pollution. We have evaluated the pollutant concentration, emissions, and price impacts of Federal RFG, RVP, California RFG, and other boutique fuel rules. We find that California RFG continues to deliver large improvements in air quality, while the benefits from RFG, RVP and boutique fuels are either small or statistically insignificant. We note, that ex post impacts of reformulated fuels are smaller than those predicted by ex ante analyses.