The oxygenate MTBE has been found to have contaminated groundwater, mostly through leaks in underground gasoline storage tanks. In 2004, California and New York banned MTBE, generally replacing it with ethanol. Several other states started switching soon afterward.
In the United States, preferential regulatory and tax treatment of ethanol (and methanol) automotive fuels introduces complexities beyond the energy balance inherent in and the engineering merits of the fuels themselves. North American automakers have in 2006 and 2007 enthusiastically promoted a blend of 85% ethanol and 15% gasoline, marketed as E85, and their flex-fuel vehicles, e.g. GM's " Live Green, Go Yellow" campaign. The apparent motivation for this is the nature of U.S. Corporate Average Fuel Economy (CAFE) standards, which give an effective 54% fuel efficiency bonus to vehicles capable of running on 85% alcohol blends over vehicles not adapted to run on 85% alcohol blends,. This regulatory artificiality is quite valuable to the North American auto manufacturers in avoiding fines for failing to meet CAFE fuel economy standards imposed upon each manufacturer's car and light truck fleets. In addition to this auto manufacturer-driven impetus for 85% alcohol blends, the United States Environmental Protection Agency had authority to mandate that minimum proportions of oxygenates be added to automotive gasoline on regional and seasonal bases from 1992 until 2006 in an attempt to reduce air pollution, in particular ground-level ozone and smog. As a consequence, much gasoline sold in the United States is blended with up to 10% of an unspecified oxygenating agent. This product is known formally as oxygenated fuel and often (but not entirely correctly, as there are Federally-mandated reformulated gasolines without oxygenate) as reformulated gasoline. Groundwater contamination scares and the State of California's ban of the substance as a gasoline additive has allowed ethanol to displace methyl tert(iary)-butyl ether (MTBE) as the most popular fuel oxygenate in the United States.
Many motorists in the U.S. did not welcome oxygenated gasoline because of its reduced energy density resulting in increased fuel consumption and because of fears of damage to cars, particularly to older cars. Alcohol (particularly methanol) fuel blends were expected to cause chemical damage to fuel system materials not designed to withstand exposure to alcohols, to increase water contamination due to alcohols' co-solvent properties, and via alcohols' solvent action loosening fixed fuel system deposits thus causing free-moving particulate contamination and clogging of various components. Experience with oxygenated fuels has shown little widespread deleterious mechanical effects, but oxygenated fuels have resulted in increased fuel consumption and often higher fuel prices. Although market conditions vary widely, ethanol is generally more expensive on a volumetric basis (and unquestionably more expensive on an energy content basis) than the gasoline with which it is blended. Refining and distribution complexities associated with regionally-specific oxygenated 'boutique gas' blends also has significantly raised gasoline prices in parts of the United States, particularly in California. Air pollution benefits from oxygenated fuels have thus far been difficult to quantify and to attribute to oxygenated fuel, but undoubtedly small.
Many American motorists see the promotion of, Federal subsidy for, and high import tariffs protecting domestic production of ethanol motor fuel and the Federal mandate for oxygenated gasoline to be essentially political phenomena. The principal driver in promoting E85 is the North American auto industry's need to avoid CAFE fines; in the fuel alcohol industry as a whole lobbying by American corn producers and agribusiness, in particular Archer Daniels Midland, the biggest ethanol producer in the United States, has done much to get the fuel alcohol industry its present subsidized and protected status. Advocates for wheat, corn and sugar growers have succeeded in their attempts to lobby for regulatory intervention encouraging adoption of ethanol, stimulating debate over who the major beneficiaries of increased use of ethanol would be. Some researchers have warned that ethanol produced from agricultural feedstocks will cause a global food shortage, contributing to starvation in the third world.
Most forms of automobile racing that require the use of gasoline as fuel (as opposed to higher-energy blended fuels or straight alcohols) prohibit the use of oxygenate compounds in fuels, as they can allow higher fuel burn than the engine intake restrictions are designed to permit. Prior to the 2007 Daytona 500, for example, NASCAR driver Michael Waltrip and his team were heavily penalized when evidence of an unspecified oxygenate compound was found in the car's intake manifold during inspections.