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<p>LOS ANGELES(AP) - Californians face the prospect of substantial volatility and spikes in gasoline prices next year as refiners switch to an ethanol-based gasoline.</p> <p>Energy traders, marketers and analysts warn that the transition from blending fuel with the additive MTBE (methyl tertiary butyl ether) to using ethanol could bring gasoline shortages next year. They expect ethanol use to make blending and distribution more difficult, while leaving the state more dependent on outside suppliers.</p>

<p>WASHINGTON -- A major battle has flared over granting a liability waiver to producers of the gasoline additive MTBE, and it alone could sink the energy bill in the waning congressional session.</p> <p>Environmental groups and MTBE producers differ over whether this waiver, sought by House leaders, would make it impossible for communities to collect damages from underground contamination.</p>

<p>An international trade tribunal has turned back a Canadian company's attempt to dilute California's environmental laws but given the firm a narrow chance to pursue its $1 billion claim.</p> <p>In a closely watched case, the North American Free Trade Agreement panel this week rejected claims by Methanex that California had broken international law by banning MTBE, a gasoline additive that was meant to help ease air pollution but ended up contaminating drinking water across the state.</p>

<p>BP says it will switch to ethanol this year; others are expected to follow. California's largest gasoline supplier announced Thursday it will phase out the gasoline additive MTBE and switch to ethanol by the year's end, a move that may trigger other major producers to follow suit.</p>

Two major oil companies and the manufacturer of MTBE, a major pollutant, were convicted of concealing their knowledge of the hazards associated with the gasoline additive. The verdict by a San Francisco jury Tuesday went against the defendants even though in adding MTBE, or methyl tertiary butyl ether, to their gasoline, the oil companies had acted under orders from the federal government. The Feds Made Them Do It The federal Clean Air Act mandates that areas not meeting air quality standards must use MTBE or ethanol to reduce vehicle pollution, the defendants argued. In California, the refiners chose MTBE, which...

SACRAMENTO -- A new report says banning the fuel additive MTBE this December could cause supply shortages and price spikes, and recommends delaying the ban until 2005. Irvine-based Stillwater Associates reported Thursday that state gasoline supplies could run 55,000 to 100,000 barrels short daily, with up to 80 percent of the impact felt in southern California. The consulting firm, in a report to the California Energy Commission, recommends delaying the ban until November 2005 to get "significant additional supplies for the state's gasoline pool." Three years ago Gov. Gray Davis ordered a ban on MTBE, or methyl tertiary butyl...

<p>REDONDO BEACH, Calif. (AP) --  Saying he wanted to avoid another kind of energy crisis, Gov. Gray Davis on Friday gave gasoline makers another year to phase out the use of fuel additive MTBE.</p> <p>Davis extended the deadline from Dec. 31, 2002 to Jan. 1, 2004.</p>