RFA accuses Big Oil of anticompetitive practices in new report
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WASHINGTON, July 9, 2014 -- The Renewable Fuels Association (RFA) struck another blow in its seemingly endless battle with big oil companies for the American consumer's fuel dollar.
RFA released a report Tuesday detailing practices that the organization says are preventing E15 (15 percent ethanol, 85 percent gasoline) and E85 from making it to many gas pumps across the country. The report claims that while the five largest oil companies (Exxon, BP, ConocoPhillips, Chevron and Shell) may not own many retail gas stations, they still make it harder for higher blends of ethanol to make it to the consumer.
“Through rigid franchise and branding agreements, restrictive supply contracts, outlandish labeling requirements, punitive penalties, and other heavy-handed tactics, Big Oil prevents and discourages retail stations from selling fuels with higher renewable content, like E15 and E85,” the RFA said in the report.
RFA contends that the infrastructure and demand is in place to support distribution for E15 and E85, but monopolistic practices -- fuel contracts with supplier exclusivity or required warning labels on E85 dispensers, to name a few -- from the “Big Five” oil companies prevent independent retailers from providing the fuels.
“In the end, whether oil companies directly ‘own' America's 156,000 fueling stations is largely irrelevant. Big Oil doesn't need to physically own retail stations to exert massive influence over which fuels are offered for sale to consumers,” the report noted. “Until these roadblocks are addressed in a comprehensive and meaningful way, American consumers will continue to suffer from Big Oil's monopoly at the pump.”
The report included a Consumer Choice Report Card, which graded retail gasoline chains on whether or not alternative fuel options were available at their outlets. Using Department of Energy Alternative Fuels Data Center figures, RFA marked 34 companies with an “F” for distributing E15 or E85 at less than 1 percent of branded stations. Using the data from the report card, RFA concluded that unbranded or independent stations are four to six times more likely to offer E15 than stations carrying a brand of one of the Big Five oil companies.
In August, Sens. Amy Klobuchar, D-Minn., and Chuck Grassley, R-Iowa, asked the Justice Department and Federal Trade Commission (FTC) to investigate possible anticompetitive practices in the oil industry, but received a response Grassley described as “cookie cutter,” and little action was seen. Grassley hopes the information in this report will lead to further investigation from the FTC.
“The actions of Big Oil that are standing in the way of meeting the requirements of the Renewable Fuels Standard (RFS),” Grassley said in a conference call with reporters Tuesday morning. “(Oil companies) can't argue (the RFS) should be repealed because it doesn't work when they're the ones responsible for ensuring that consumers don't have the choice for higher ethanol blends.”
RFA President Bob Dinneen said his organization plans to continue a dialogue with the FTC, but the previous response to the request for investigation leaves him skeptical.
“Quite frankly, they've not shown much enthusiasm for going after the oil companies on this issue and I can't understand why,” Dinneen said. “I guess they've had other priorities.”
While those selling renewable fuels content the odds are stacked against them, members of the petroleum industry say the consumer is simply letting the dollar speak for itself.
“Gas stations are in the business of selling fuels people want, and consumers have rejected high ethanol blends that lower gas mileage and cost more over time,” American Petroleum Institute spokesman Carlton Carroll said in an email to Agri-Pulse.
As all parties involved await a ruling from the EPA on its proposal to reduce mandated biofuel use in the Renewable Fuel Standard, Dinneen pointed out that the renewable fuels and auto industries have responded to increased demand brought about by the RFS. Only one sector has refused to adapt, he said.
“The only stakeholder that has resisted has been the oil companies,” Dinneen said. “We think that if you simply enforce the Renewable Fuel Standard, it will compel the oil companies to make more than 10 percent fuels (E10) available to those consumers that want to use them.”
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