As crude oil passed the $40-a-barrel mark last week, the Senate Environment and Public Works Committee heard industry experts’ views on whether federal regulations were a contributing factor.

Industry and environmental and health panelists participated in the hearing. Petroleum industry representatives said environmental regulations had made it costlier to refine oil. Others countered that the health and environmental benefits outweighed the industry's costs to produce cleaner-burning fuels. Those same differences of opinions continued along party lines.

Regardless of the causes, all agreed that a reduction in the number of domestic refineries had resulted in a diminished gasoline supply.

Chairman James Inhofe, R-OK, noted the number of refineries dwindled from 324 in 1981 to 149 today. He said it would take between five and seven years and a cost of $2.5 billion to build a new refinery, which would have to meet a host of environmental and local issues.

John Dosher, director of the Jacobs Consultancy, said the petroleum refining industry had reacted to the Clean Air Act and its amendments since it was passed into law in 1972.

"Due to the poor and uncertain climate for investments in the refining industry, gasoline supply is the United States is now tight and is expected to get even tighter," he said.

Bob Slaughter, president of the National Petrochemical and Refiners Association, said replacing methyl tertiary butyl ether – better known as MTBE – with ethanol would cause refiners to refit their plants, further affecting the cost of gasoline the pump. Such a move may also result in more refineries closing down, he said.

MTBE is frequently used as an additive in gasoline, but can cause considerable damage to water tables if it leaks from underground fuel tanks. Many states are pressing for it to be replaced with ethanol, which is less polluting and which is made from farm products.