With the Middle East crisis threatening to drive-up the cost of oil and gas even further, consumers should not overlook the underlying costs of the MTBE and ethanol gasoline additive fiasco.

It has been reported that the projected clean-up of MTBE will cost $29 billion nationally, which will cost consumers 22 cents per gallon, and that the cost of replacing MTBE with ethanol will drive the cost of gasoline even higher - some say as high as $3.00 per gallon.

Serious questions about MTBE and ethanol should be answered, and those responsible should be held accountable. First, how could MTBE have been approved as a gasoline additive, especially in the environmentally-conscious State of California, without testing it for water contamination, not to mention the unknown health risks from breathing it, before and after combustion? Why didn't the state and federal environmental protection agencies catch it and prohibit it to begin with? And why did California Governor Gray Davis extend the elimination of MTBE from gasoline from 2002 to 2004?

When MTBE is removed, it will be replaced with ethanol corn squeezings, which costs even more to refine and doesn't save any oil because it takes nearly as much oil to refine ethanol as it replaces, so the renewable energy argument for ethanol is redundant. And, like with MTBE, there are unanswered questions about the health risks of ethanol. Even though the ethanol additive produces less carbon monoxide, it produces more smog, which causes more asthma, other respiratory health problems and cancer.

The big question is, when are we going to say "enough" to the inept, meddling idiots who cost us more and put our health more at risk in the name of the environment -- without checking it out first -- and the only winners of the game are corn and oil conglomerates? Seems like the ballot box is a good place to start...

Meanwhile, MTBE should be put back in the scary grab bag from whence it came, and corn should resume its natural role as a major food source. Government should keep its soiled fingers out of gasoline, wash them, and step up the work on alternative fuels like hydrogen fuel cells, which can also produce electricity for our homes, business and industry.

Daniel B. Jeffs, founder
The Direct Democracy Center

******

Revealing information from Ethanol-promoting Websites:

BBI International energy consulting firm - BBIethanol.org
RFA Renewable Fuels Association - EthanolRFA.org

April 3, 2002

Ethanol Industry Urges Kinder Morgan to Allow Gasoline Blendstocks for Ethanol Through California Pipeline System

WASHINGTON, DC - As reports continue to appear that several California oil refiners prefer to switch from MTBE to ethanol by the end of this year, the Renewable Fuels Association (RFA) urged Kinder Morgan, which operates California's only common carrier pipeline system, to allow shipments of gasoline blendstocks for ethanol. If Kinder Morgan decides to allow only MTBE-blended gasoline through their pipelines, oil companies will feel compelled to continue using MTBE, a water-polluting gasoline additive, instead of switching to ethanol.

"According to several news reports, four of California's six major oil companies prefer to switch from MTBE to ethanol this year," said Bob Dinneen, RFA president. "Kinder Morgan has stated they could accommodate both fuels and was recently quoted saying, 'They're [oil companies] our customers. We'll do what they want.' We are writing to urge Kinder Morgan to follow up on their public comments. The message is clear. The majority of California oil companies want to use ethanol. Kinder Morgan should accommodate their needs. By doing so, the opportunities for further MTBE drinking water contamination can be reduced."

In a letter to Kinder Morgan Chairman Richard Kinder, Dinneen wrote:"In the aftermath of California Governor Gray Davis' decision to delay the MTBE phase out, several oil companies have expressed a preference to move forward with their plans to eliminate the use of MTBE in the state as originally scheduled. As the sole common carrier pipeline operating in California, however, your company's decisions will to a large extent determine whether those oil companies preferring to use ethanol will indeed be able to do so. Consequently, I am writing to urge you to allow gasoline blendstocks for ethanol to be shipped on the Kinder-Morgan pipeline, thereby providing refiners and consumers in California access to MTBE-free gasoline.

"The domestic ethanol industry has demonstrated there are sufficient supplies of ethanol to replace MTBE, refiners have testified to their readiness to meet the original phase out deadline, and state water officials are adamant that drinking water supplies be protected. More importantly, consumers across California overwhelmingly believe MTBE should be removed from gasoline.

"I understand the uncertainty created by the Governor's decision to delay his March 1999 Executive Order has made investment decisions more difficult. That uncertainty is complicated further by legislative activity in Washington, D.C. that will affect oxygenate and renewable fuel use in California and across the country. But under any circumstance, it is clear the demand for ethanol will increase in California, and any investments necessary to accommodate the use of ethanol today will certainly pay dividends quickly.

"The petroleum industry and the ethanol industry are looking for workable solutions to the MTBE issue in California, but no transition plan can be effective if the only common carrier pipeline responsible for transporting the majority of gasoline across the state restricts the opportunities to use ethanol blended gasoline.

"Because of Kinder Morgan's unique and critical role in supplying gasoline throughout California, it is our goal to work with you and the petroleum industry to create the best opportunities for consumers in the state. I hope that you will be willing to work with our member companies to accommodate those refiners and gasoline marketers preferring to use ethanol blended gasoline now, rather than when MTBE is banned by the State of California."

For more information, visit the Renewable Fuels Association website at:
www.ethanolRFA.org

****** LATEST NEWS
April 19, 2002
California Jury Verdict Highlights Hidden MTBE Gas Tax

MTBE Clean-up To Cost Consumers 22 Cents Per Gallon of Gasoline

WASHINGTON, DC - On Monday a jury in San Francisco held three oil companies liable for the MTBE contamination of Lake Tahoe in California. Several other companies had settled with the South Tahoe Public Utility District prior to trial. The Tahoe district estimates that clean-up costs could amount to more than $50 million.

"There is a rising gas tax on American consumers - the clean-up costs related to MTBE," said Bob Dinneen, RFA president. "It doesn't matter whether local governments or oil companies pay for clean-up efforts; the ultimate cost is borne by consumers in the form of higher taxes or higher prices at the pump. The longer MTBE remains a part of our gasoline supply, the higher this tax will be. MTBE clean-up costs amount to the equivalent of a hidden 22 cent per gallon gasoline tax. The current Senate energy bill contains a bipartisan agreement that will ban MTBE nationwide in four years, but efforts to destroy this agreement by reducing or eliminating the renewable fuels standard (RFS) will do nothing more than extend the use of MTBE and force higher pump prices onto the backs of consumers."

A study conducted for the city of Santa Monica, that is also suing oil companies for MTBE contamination, found it will cost at least $29 billion to clean-up MTBE nationwide - or 22 cents for every gallon of gasoline sold in the U.S. last year. According to the U.S. Energy Information Administration, 131.6 billion gallons of gasoline were consumed in 2001.

"This jury has sent a clear message to refiners that they should stop using MTBE as soon as possible," said Dinneen. "For example, in California, every oil refiner has indicated they could switch from MTBE to ethanol by the end of this year. Now that Governor Davis delayed the state's MTBE ban until 2004 there is uncertainty whether the refiners will move forward. However, this verdict clearly highlights the liability risk of continued MTBE use. The ethanol industry stands ready to supply any oil company wishing to end their use of MTBE and reduce their exposure to future clean-up costs. Switching to ethanol makes sense for consumers and it makes dollars and cents for oil companies."

The Tahoe trial now moves to the penalty phase where the utility district is seeking actual and punitive damages. Similar suits are moving forward in numerous other states. Fourteen states have acted to ban MTBE as a result of water contamination and other bans are pending.

******

Powerful opposing forces killed proposed Alaskan oil drilling and tighter fuel standards

By H. JOSEF HEBERT, Associated Press Writer

WASHINGTON - The Senate is moving to wrap up an energy bill, but without two proposals that sparked the greatest political fireworks and may have had the most impact.

Drilling in Alaska's Arctic National Wildlife Refuge (news - web sites), which environmentalists made a symbol of their opposition to the Bush administration's policies, and slapping automakers with tough new fuel economy requirements were found to be politically too hot to accept.

In a showdown Thursday over the future of the refuge, drilling supporters could muster only 46 of the 60 votes needed to end a Democratic filibuster and allow a vote on putting the refuge provision into a broader energy bill..

The House already had approved drilling as part of its energy package and President Bush (news - web sites) had made it a centerpiece of his energy agenda..

"The Senate missed an opportunity to lead America to greater energy independence," White House spokesman Ari Fleischer (news - web sites) declared, echoing Alaska's two senators who described the refuge as a way to reduce U.S. reliance on dictators such as Iraq's Saddam Hussein (news - web sites) for its energy..

Still, eight Republicans abandoned Bush and joined with most Democrats in rejecting drilling in ANWR, as the refuge is called. "There are other, more feasible options for ... reducing national foreign oil dependence," said Sen. Lincoln Chafee (news, bio, voting record), R-R.I..

"Development would irreversibly damage this natural resource," argued Sen. Joe Lieberman (news - web sites), D-Conn., referring to the refuge's coastal plain where thousands of caribou visit and give birth to their young each summer, joined by millions of migratory birds, musk-oxen, polar bears and other wildlife..

While drilling advocates argue the oil could be developed while still protecting the wildlife, Sen. John Kerry (news, bio, voting record), D-Mass., maintained that the oil - estimated as likely between 5.7 billion and 11.6 billion barrels - still wasn't enough to make a serious dent in imports when it would start flowing south in eight to 10 years..

What would help, Kerry argued, would be a significant increase in the fuel efficiency of automobiles and sport utility vehicles, which guzzle 70 percent of the 19 million barrels of oil consumed each day in the United States..

But like the Arctic drilling, the auto fuel economy became a lightning rod in the energy debate. When Kerry pushed to boost federal fuel economy requirements by 50 percent, the auto industry and autoworkers said jobs would be lost and suburban soccer moms would no longer be able to buy SUVs. The proposal was killed last month on a 63-38 vote..

Many of the same senators who opposed the fuel economy increase raised alarms during the Arctic refuge debate over U.S. reliance on oil imports, said Kerry. "They had no interest in national security when we put before the Senate a plan that would have saved America 1 million barrels a day in 2015 and 2 million barrels a day by 2020.".

The Senate likely will finish its energy legislation, covering more than 580 pages, sometime next week. Both Senate Majority Leader Tom Daschle, D-S.D., and Republican leader Trent Lott of Mississippi want a bill, as does the White House..

While lacking either oil drilling in ANWR or significant auto fuel economy measures, the bill includes myriad items that are attractive to politically powerful energy industries.

*******

April 5, 2002

Anti-MTBE campaign gets in gear.

Despite Gov. Gray Davis's decision to delay banning the polluting fuel additive MTBE until 2004, environmental groups want to shame oil companies into removing the chemical from California gasoline by next winter anyway..

In a letter to international oil giant BP, which owns the Arco retail gasoline chain, 37 environmental and pro-ethanol groups said they are considering a campaign "to inform Californians which companies are supporting MTBE.".

Consumers then could choose to buy gasoline from companies that have replaced MTBE with ethanol, a fuel additive made largely from corn..

Amid predictions that gas prices would soar up to $3 a gallon, Davis decided last month to delay banning MTBE (methyl tertiary butyl ether) until the start of 2004..

Nevertheless, two of the state's six large oil refiners -- ChevronTexaco and Shell Oil -- say they are planning to eliminate MTBE at the end of the year if Kinder Morgan Energy, the state's main owner of pipelines and tanker truck terminals, can accommodate the change..

The refineries then would have to replace MTBE with ethanol in much of their gasoline production. Ethanol, would be blended into gasoline at Kinder Morgan's truck-filling stations and stations owned by the refiners themselves..

Phillips Petroleum already has switched from MTBE to ethanol at its Rodeo refinery, but is re-evaluating whether it can continue with the phaseout..

If BP, ChevronTexaco and Shell all commit to the switch, the other oil companies would likely follow, said Brooke Coleman, director of the Renewable Energy Action Project, a coalition of environmental and pro-ethanol groups..

Coleman said he is targeting BP because the United Kingdom-based company touts itself as an environmentally sensitive energy company..

When BP purchased Arco in 1999, the company told Davis that it would try to remove MTBE -- a suspected carcinogen that has polluted water supplies -- from California gasoline one year early..

The company did not accomplish that goal..

"They're talking the talk about environmental protection and social responsibility, but in California they're not walking the walk," Coleman said. "This is an opportunity to show that they're serious about protecting their own consumers.".

BP is the largest California user of MTBE, according to California Energy Commission statistics..

Company spokesman Paul Langland said the company is continuing upgrades to its Southern California refinery that will allow it to ultimately eliminate MTBE..

"We support the governor's decision but we're looking at all of our options," said Langland. "To bring disruptions to the California gasoline market is not in anyone's best interest.".

Because oil refiners share Kinder Morgan's pipeline system and truck terminals to transport their gasoline, "it's impractical for a single company to act alone in this huge complex distribution system," said ExxonMobil spokeswoman Jeanne Miller..

ExxonMobil did not take a position on delaying the MBTE ban, but said it would continue to upgrade its refinery to eliminate MTBE..

After Davis announced the delay, Kinder Morgan decided to halt all modifications to its terminals that fill up gasoline tanker trucks..

The company is not willing to spend money on the upgrades unless it is sure that it gets a return on its investments, spokesman Rick Rainey said..

"We've seen no clear indication as to which direction they're headed," Rainey said. "As soon as they let us know what their plans are, we're more than willing to respond.".

Steve Hall, executive director of the Association of California Water Agencies, said the state should encourage Kinder Morgan and the refiners to eliminate MTBE as soon as possible..

"We think that the best way to solve the logistical problems is to start tackling them," he said..

Valero Energy, which supports the governor's decision, said it may move to ethanol if the rest of California's refiners do so..

"There's just a whole lot of uncertainty in the industry now about what will actually occur," said company spokeswoman Mary Rose Brown. "if everybody moves to ethanol, we may have no choice than to move to ethanol early.".

Tesoro Petroleum, which will take over the Golden Eagle refinery near Martinez at the end of April, declined to comment until the refinery acquisition goes through..

Business Writer Alan Zibel can be reached at (925) 416-4805 or azibel@angnewspapers.com.

********

April 10, 2002

Kinder Morgan Moving Ethanol Blendstock in California.

HOUSTON - Kinder Morgan Energy Partners, L.P. today clarified a number of inaccuracies that have been reported in the media following a decision by California Governor Gray Davis to delay a ban on MTBE gasoline until Dec. 31, 2003. "Unfortunately, KMP's role has been mischaracterized," said Mary Morgan, vice president of marketing for KMP. "We are simply a service provider, and our sole objective is to meet our customers' needs. We will not be an impediment to the conversion from MTBE to ethanol.".

KMP owns a common carrier products pipeline in California that transports gasoline, jet fuel and diesel fuel throughout much of the state. KMP has published specifications for ethanol blendstock (CARBOB -- California Reformulated Blendstock for Oxygenate Blending), which is the primary component of ethanol-blended gasoline, and routinely accepts nominations for and provides transportation of CARBOB. "We have been moving CARBOB on our pipeline for over a year and have no plans to discontinue or change this policy," Morgan said. "Any shipper that wants to move CARBOB on our pipeline may do so right now.".

A secondary issue involves the availability of ethanol-blending facilities at refineries and terminals. In many locations, the major refineries have their own terminals and are capable of blending their own ethanol without KMP's involvement. In fact, much of the gasoline delivered to the Los Angeles and San Francisco areas is supplied to retail stations directly from the refineries in those areas..

KMP owns 11 terminals in California, of which seven currently have limited ethanol- blending capabilities. KMP's terminal facilities will be ready to accommodate additional ethanol blending when the MTBE ban goes into effect, or sooner, if a customer has a need and enters into a contract for those services..

Kinder Morgan Energy Partners, L. P. is the nation's largest pipeline master limited partnership with an enterprise value of approximately $9 billion. KMP owns and operates more than 25,000 miles of pipelines and over 70 terminals. Its pipelines transport more than two million barrels per day of gasoline and other petroleum products and up to 7.8 billion cubic feet per day of natural gas. Its terminals handle over 55 million tons of coal and other dry-bulk materials annually and have a liquids storage capacity of approximately 55 million barrels for petroleum products and chemicals. KMP is also the leading provider in the U.S. of CO2, which is used in enhanced oil recovery projects..

The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI), one of the largest midstream energy companies in America. Combined, the two companies have an enterprise value of approximately $18 billion.

********

April 9, 2002

Ethanol debate is ready to boil over

BY TOM WEBB
Washington Correspondent.

WASHINGTON - Ethanol is a fuel that burns both ways..

In Minnesota corn country, nothing burns as brightly. A boom in ethanol production has created rural jobs, boosted corn prices and rejuvenated farming communities, luring farmers to invest in facilities that turn yellow corn into golden profits..

"It's been a success story all the way around," said Richard Eichstadt, manager of Pro-Corn, an ethanol plant near Preston. The plant opened in 1998 and is already expanding - to four times its original capacity..

But outside the Midwest, ethanol burns in a different way: It inflames..

Taxpayer groups howl about its government subsidies. Environmentalists say ethanol causes as much harm as good. And critics mock its energy claims, saying ethanol requires almost as much energy to make as it yields..

"If you have a government order forcing people to consume it, an industry will develop," said Jerry Taylor of the Cato Institute, a Washington policy group. "But it doesn't make it an efficient industry, or a good industry, or economically wise.".

The ethanol debate has simmered for years, but this spring it may erupt..

Three big decisions are pending that will chart ethanol's national future..

So far, Midwestern ethanol boosters are winning on all three fronts:.

. The U.S. Senate this week will resume work on an energy bill that requires tripling ethanol use nationwide, and would eventually ban an additive called MTBE that competes with ethanol in clean-air programs. .

. Congress this spring will try to pass a 10-year farm bill that could include new incentives for growing corn, for building ethanol plants and for using the fuel..

. In California, a fight is coming to a head on whether the state must use ethanol to meet clean-air requirements. Democratic Gov. Gray Davis is balking, fearing an ethanol shortage that could send gas prices soaring to $3 a gallon..

Alluding to last year's crisis over man-made electricity there, Davis said, "I am not going to allow Californians to be held hostage by another out-of-state energy cartel.".

For Minnesota, which has never produced fossil fuels of its own, it's a turnabout to be seen as an "out-of-state energy cartel." But it reveals how the successes of the Midwest farm lobby is stirring up strong resentments on both coasts..

For the past decade, Minnesota's ethanol growth has been fueled by state and federal subsidies, goals of energy independence and a strong environmental appeal..

But some environmentalists aren't convinced..

Under federal rules, cities that don't meet clean-air standards must use oxygenated fuels, like ethanol, to reduce pollution. California used MTBE, a chemical additive, but it polluted the groundwater. Ethanol fans say the solution is obvious: Stop using MTBE and switch to ethanol for cleaner air and water..

California officials dislike MTBE, but they don't see ethanol as the answer, and they resent federal edicts forcing them to use it. Some environmentalists are sympathetic, including Daniel Becker, director of the Sierra Club's global warming program..

"If ethanol is produced in the right way and is used properly, it can help reduce pollution," Becker said. "If it's produced in the wrong way and used in the wrong seasons, it can increase pollution.".

Becker said ethanol does reduce some emissions, like carbon monoxide, which helps in cold weather. But in warm weather, "it makes the entire (fuel) mixture evaporate more readily than with just gasoline alone, and that causes an enormous smog problem.".

In cold-weather Minnesota, by contrast, ethanol-blended gasoline is widely credited with improving air quality. Twin Cities gas stations have been required to sell only ethanol blends since 1995. The restriction went statewide in 1997..

Today the state has 14 ethanol plants in the state, in towns such as Preston, Little Falls and Buffalo Lake, nearly all new. Most of those 14 plants were bankrolled by groups of farmer-investors, with help from a state subsidy..

"They were responding to a depressing situation in rural communities where, gee, there weren't any jobs, kids were leaving town because there were no jobs, and the price of corn was cheap," said Ralph Groschen with the Minnesota Department of Agriculture. "In most cases, the towns and the farmers and the local banks all chipped in to make it happen.".

Not only was the formula a success, but the building boom continues..

"Most of the (14) plants have expanded recently or are in the process of expanding," Groschen said..

In Preston, Eichstadt said, "the impact it has had on the community here is enormous": higher corn prices, 30 new jobs in the community south of Rochester, new economic activity..

"There is some local pride associated with these plants, too," he said. "They feel that they're doing somewhat their part (to help the country) because they're producing an environmentally clean fuel, a renewable fuel.".

It's those hopeful stories, repeated around the corn belt, that prompt farm-state Republicans and Democrats to push so hard on ethanol..

But as their fight goes national, outsiders will resist subsidies and mandates designed mostly to produce good things in the Midwest..

Scoffed Taylor, the Cato analyst, "I'm sure robbing banks looked like a good thing to Bonnie and Clyde, too."

********

April 9, 2002.

Impacts for Investors as Middle East Tensions Heighten Risks to Oil Supplies Says S&P Industry Survey; Fallout from Standoff between OPEC and Russia Over Oil Production also Mentioned A Possible U.S. Attack Against Iraq Will Determine the Extent.

NEW YORK, April 4 /PRNewswire/ -- Standard & Poor's has released its forecast for the Oil and Gas Production and Marketing Industry, which sees Russia emerging as an alternative to Middle East oil supplies and poised to regain its position as the world's top crude-oil producer for the first time in a decade, as OPEC member nations comply with the cartel's quotas in 2002. The leader in global financial research and investment analysis says that short-term supply risks due to Middle East tensions and possible expansion of the war on terrorism to Iraq are mitigated by the increased stores of oil built up during the recent economic downturn. Beyond these issues, the depletion of current reserves poses an ongoing long-term challenge for the industry. For U.S. natural gas producers, the drop in actively-producing gas rigs in 2001 stemming from a slow economy's reduced demand could mean a return to the high gas prices of 2000, as demand outpaces the reduced supply this year. The forecast is part of Standard & Poor's Industry Survey on Oil and Gas: Production & Marketing, a study produced every six months by the firm's senior equity analysts. Standard & Poor's Industry Surveys series keeps a watchful eye on 51 U.S. industries, offering insights into trends and conditions that affect leading companies' market performance..

"With the Middle East holding 66% of the world's oil reserves and supplying over 35% of its current production, heightened tensions in the Middle East could lead to a short-run supply of oil. Also, energy production and distribution are vulnerable to the risk of terrorist attacks on the U.S. and elsewhere," says Tina Vital, Standard & Poor's Oil and Gas analyst and author of the survey. "But a serious problem looms in the long run as well: the depletion of oil reserves. From 1980 to 1990, oil reserves rose by 54%; however, from 1990 to 2000, oil reserves have increased by only 1.4%. So is oil really running out?" she continues. Vital concludes: "The easy answer is yes: Oil is a non-renewable resource and will someday become scarce. The hard part is determining when.".

Industry Surveys for the Oil & Gas: Production & Marketing Industry looks at the issues affecting all segments of the oil and gas production industry, including: the National Energy Security bill before Congress which affects the oil and gas industry on matters including automotive fuel economy standards and a mandate to boost ethanol use; foreign trade restrictions, notably regarding Iran and Libya; the growing prominence of newly-privatized firms from emerging market economies; the impact of just-in-time refining; and Europe's lead in the development of renewable energy projects. It also looks at how certain of these issues and industry consolidations affect companies such as BP, ChevronTexaco, ExxonMobil, Royal Dutch/Shell, and TotalFinaElf.

********

ARCHIVED NEWS

April 12, 2002

DEFEAT OF FEINSTEIN ANTI-RFS AMENDMENT IS VICTORY FOR ENERGY SECURITY AND RENEWABLE FUELS

Senate Votes to Promote Renewable Fuels 61 to 36.

WASHINGTON, DC - Following action by the U.S. Senate today to protect the renewable fuels standard (RFS) provisions of the energy bill, the Renewable Fuels Association declared a victory for energy security, clean air, consumers, and renewable fuels. By a bipartisan, filibuster-proof vote of 61 to 36, the Senate tabled, or defeated, an amendment by California Senator Dianne Feinstein, which would have reduced the maximum time for the EPA to respond to RFS waiver requests from 240 to 30 days. The RFS provisions are backed by a historic coalition including members of the oil industry, agricultural groups, environmental groups, public safety agencies, and the ethanol industry. The amendment was offered during debate on S. 517, the Senate energy bill..

Bob Dinneen, RFA president, made the following statement after the Senate action:.

"Today's strong support for a meaningful renewable fuels standard reflects the commitment of the American people to forge a new direction for meeting our nation's energy needs. Energy security, affordable gasoline, and clean air are not mutually exclusive. Today's strong endorsement of an RFS is a step in the right direction for a brighter energy future..

"Given the broad, bipartisan support for enacting a meaningful RFS, today's outcome was never really in doubt. The American people want more reliance on clean, domestic fuels and less reliance on Saddam Hussein. They want MTBE out of their gasoline and out of their drinking water. And they want affordable gasoline while not sacrificing air quality. That's what the RFS provisions embody and that's why the attempt to undue this historic agreement was soundly defeated.".

For more information, visit the Renewable Fuels Association website at: www.ethanolrfa.org.

********

ARCHIVED NEWS

April 10, 2002

Kinder Morgan Moving Ethanol Blendstock in California.

HOUSTON - Kinder Morgan Energy Partners, L.P. today clarified a number of inaccuracies that have been reported in the media following a decision by California Governor Gray Davis to delay a ban on MTBE gasoline until Dec. 31, 2003. "Unfortunately, KMP's role has been mischaracterized," said Mary Morgan, vice president of marketing for KMP. "We are simply a service provider, and our sole objective is to meet our customers' needs. We will not be an impediment to the conversion from MTBE to ethanol.".

KMP owns a common carrier products pipeline in California that transports gasoline, jet fuel and diesel fuel throughout much of the state. KMP has published specifications for ethanol blendstock (CARBOB -- California Reformulated Blendstock for Oxygenate Blending), which is the primary component of ethanol-blended gasoline, and routinely accepts nominations for and provides transportation of CARBOB. "We have been moving CARBOB on our pipeline for over a year and have no plans to discontinue or change this policy," Morgan said. "Any shipper that wants to move CARBOB on our pipeline may do so right now.".

A secondary issue involves the availability of ethanol-blending facilities at refineries and terminals. In many locations, the major refineries have their own terminals and are capable of blending their own ethanol without KMP's involvement. In fact, much of the gasoline delivered to the Los Angeles and San Francisco areas is supplied to retail stations directly from the refineries in those areas..

KMP owns 11 terminals in California, of which seven currently have limited ethanol- blending capabilities. KMP's terminal facilities will be ready to accommodate additional ethanol blending when the MTBE ban goes into effect, or sooner, if a customer has a need and enters into a contract for those services..

Kinder Morgan Energy Partners, L. P. is the nation's largest pipeline master limited partnership with an enterprise value of approximately $9 billion. KMP owns and operates more than 25,000 miles of pipelines and over 70 terminals. Its pipelines transport more than two million barrels per day of gasoline and other petroleum products and up to 7.8 billion cubic feet per day of natural gas. Its terminals handle over 55 million tons of coal and other dry-bulk materials annually and have a liquids storage capacity of approximately 55 million barrels for petroleum products and chemicals. KMP is also the leading provider in the U.S. of CO2, which is used in enhanced oil recovery projects..

The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI), one of the largest midstream energy companies in America. Combined, the two companies have an enterprise value of approximately $18 billion.

***********

ARCHIVED NEWS

April 3, 2002

Ethanol Industry Urges Kinder Morgan to Allow Gasoline Blendstocks for Ethanol Through California Pipeline System.

WASHINGTON, DC - As reports continue to appear that several California oil refiners prefer to switch from MTBE to ethanol by the end of this year, the Renewable Fuels Association (RFA) urged Kinder Morgan, which operates California's only common carrier pipeline system, to allow shipments of gasoline blendstocks for ethanol. If Kinder Morgan decides to allow only MTBE-blended gasoline through their pipelines, oil companies will feel compelled to continue using MTBE, a water-polluting gasoline additive, instead of switching to ethanol..

"According to several news reports, four of California's six major oil companies prefer to switch from MTBE to ethanol this year," said Bob Dinneen, RFA president. "Kinder Morgan has stated they could accommodate both fuels and was recently quoted saying, 'They're [oil companies] our customers. We'll do what they want.' We are writing to urge Kinder Morgan to follow up on their public comments. The message is clear. The majority of California oil companies want to use ethanol. Kinder Morgan should accommodate their needs. By doing so, the opportunities for further MTBE drinking water contamination can be reduced.".

In a letter to Kinder Morgan Chairman Richard Kinder, Dinneen wrote:"In the aftermath of California Governor Gray Davis' decision to delay the MTBE phase out, several oil companies have expressed a preference to move forward with their plans to eliminate the use of MTBE in the state as originally scheduled. As the sole common carrier pipeline operating in California, however, your company's decisions will to a large extent determine whether those oil companies preferring to use ethanol will indeed be able to do so. Consequently, I am writing to urge you to allow gasoline blendstocks for ethanol to be shipped on the Kinder-Morgan pipeline, thereby providing refiners and consumers in California access to MTBE-free gasoline..

"The domestic ethanol industry has demonstrated there are sufficient supplies of ethanol to replace MTBE, refiners have testified to their readiness to meet the original phase out deadline, and state water officials are adamant that drinking water supplies be protected. More importantly, consumers across California overwhelmingly believe MTBE should be removed from gasoline..

"I understand the uncertainty created by the Governor's decision to delay his March 1999 Executive Order has made investment decisions more difficult. That uncertainty is complicated further by legislative activity in Washington, D.C. that will affect oxygenate and renewable fuel use in California and across the country. But under any circumstance, it is clear the demand for ethanol will increase in California, and any investments necessary to accommodate the use of ethanol today will certainly pay dividends quickly..

"The petroleum industry and the ethanol industry are looking for workable solutions to the MTBE issue in California, but no transition plan can be effective if the only common carrier pipeline responsible for transporting the majority of gasoline across the state restricts the opportunities to use ethanol blended gasoline..

"Because of Kinder Morgan's unique and critical role in supplying gasoline throughout California, it is our goal to work with you and the petroleum industry to create the best opportunities for consumers in the state. I hope that you will be willing to work with our member companies to accommodate those refiners and gasoline marketers preferring to use ethanol blended gasoline now, rather than when MTBE is banned by the State of California.".

For more information, visit the Renewable Fuels Association website at: www.ethanolRFA.org

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