Environment & Energy

Bill USA

(6,436 posts) Sat Nov 30, 2013, 04:34 PM Nov 2013

FTC to investigate claims that Big Oil has been blocking access of independent retailers to E15

http://green.autoblog.com/2013/09/10/ftc-looking-into-fuel-pump-fight-between-ethanol-producers-big-oil/
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Two US senators have asked the Federal Trade Commission (FTC) to find out if Big Oil is pulling strings to block gas stations from accessing gasoline blended with extra ethanol – or 15 percent ethanol (E15). Sen. Amy Klobuchar (D – MN) and Sen. Chuck Grassley (R – IA) said they've received reports of oil companies pushing independent gas stations to sell premium gasoline along with regular gasoline. Since most US fuel stations are built with two large storage tanks, pressure to bring in premium grade gas, E15 wouldn't make it to these gas stations. The senators would like to find out from the FTC if the oil companies' actions were a possible antitrust violation. The FTC said in a letter that it would look into the issue.
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[font size="3"] THere is absolutely zero chance that anything will come of this. Big Oil stopped installation of E85 tanks by independent gas retailers for the last decade with no hint of interest on the part of the Government re anti-competitive practices. ... don't expect any interest now. [/font]

http://www.foodandfuelamerica.com/2007/07/big-oils-war-on-ethanol.html
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Big Oil's War on Ethanol

CFA Consumer Federation America Food vs Fuel : The Consumer Federation of America, a consumer watchdog group, says big oil companies are trying to stop the growth of the ethanol industry… and Big Oil is using its monopolistic power to prevent competition in the fuels industry.

In a report entitled “Big Oil vs. Ethanol: The Consumer Stake in Expanding the Production of Liquid Fuels", CFA charges that:

"major oil companies have now declared war on a key policy that can help alleviate the shortage – the expanded production of alternative transportation fuels, particularly biofuels, like ethanol."

The report goes on to say that the oil companies have systematically used their power to prevent ethanol from becoming successful:

Keeping the refining sector tight is not the only way Big Oil battles against ethanol. The oil companies have substantial market power over the distribution of alternative fuels, as a Wall Street Journal headline pointed out: “Fill Up With Ethanol? One Big Obstacle is Big Oil.”

Yet so far, only a tiny fraction of U.S. service stations let a driver fill up with ethanol. There are a number of reasons, but one big one is resistance from oil companies…

Oil companies lose sales every time a driver chooses E85, and they employ a variety of tactics that keep the fuel out of stations that bear the company name. For instance, franchises sometimes are required to purchase all the fuel they sell from the oil company…

Contract sometimes limit advertising of E85 and restrict the use of credit cards to apply for it. Some require that any E85 pump be on a separate island, not under the main canopy.

The report concludes that supporting increased competition in the automobile fuels market will help discipline a market dominated by a handful of multinational oil companies that are extracting monopoly profits from US gasoline consumers.

Big Oil's War on Ethanol - Consumer Federation of America [div style="border: 1px solid #000000;" class="excerpt"]

THE ETHANOL CHALLENGE TO BIG OIL’S MARKET POWER

The reaction of Big Oil to public policies to promote increased biofuel production and use
clearly indicates that the oil companies do not want competition to undercut the tight market
they have helped to create and maintain in the U.S. gasoline market. An examination of the
key market structural characteristics of the refining sector suggests that this is very much the
case.

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"Big Oil has reacted aggressively against the expansion of ethanol production,
suggesting that it perceives the growth of biofuels as an independent, competitive threat to its
market power in refining and gasoline marketing. This paper explored the market
fundamentals that underlay Big Oil’s reaction to policies to expand ethanol production. We
find that, at the critical margins of spare capacity, the expansion of ethanol capacity could
pose a real threat to the tight market situation that Big Oil has created by steadily underinvesting
in refining capacity."

Despite the considerable efforts of the big oil producers to restrict supply and fight availability of E85 pumps, the Government has shown little interest in investigating these anticompetitive practices of Big Oil. (the oil and gas industry is one of the most consistent large contributors to the political campaigns of many Legislators. While they have given to members of both parties the Oil and Gas industry has generally given about 70%-80% of their largess to Republicans.

And from Bloomberg/Business Week: Big Oil's Big Stall On Ethanol[div style="border: 1px solid #000000;" class="excerpt"]
http://www.businessweek.com/stories/2007-09-30/big-oils-big-stall-on-ethanol

One prong in the oil industry's strategy is an anti-ethanol information campaign. In June the API released a study it commissioned from research firm Global Insight Inc. The report concludes that consumers will be "losers" in the runup to Congress' target of 35 billion gallons of biofuel by 2017 because, it forecasts, they'll pay $12 billion-plus a year more for food as corn prices rise to meet ethanol demand. The conclusions are far from universally accepted, but they have been picked up and promoted by anti-ethanol groups like the Coalition for Balanced Food & Fuel Policy, made up of the major beef, dairy, and poultry lobbies. Global Insight spokesman Jim Dorsey says the funding didn't influence the findings: "We don't have a dog in this hunt."

Academia plays a role as well. There is perhaps no one more hostile to ethanol than Tad W. Patzek, a geo-engineering professor at the University of California at Berkeley. A former Shell petroleum engineer, Patzek co-founded the UC Oil Consortium, which studies engineering methods for getting oil out of the ground. It counts BP (BP), Chevron USA, (CVX) Mobil USA, and Shell (RDS) among its funders. A widely cited 2005 paper by Patzek and Cornell University professor David Pimentel concluded that ethanol takes 29% more energy to produce than it supplies—the most severe indictment of the biofuel. Michael Wang, vehicle and fuel-systems analyst at the Energy Dept.'s Argonne National Laboratory, says among several flaws in the study is the use of old data and the overestimation of corn farm energy use by 34%. Pimentel defends the study. In a recent update, he and Patzek hiked the estimate of ethanol's energy deficit to 43%. {A meta-analysis by Farrell et al, Univ. of California, Berkeley, Science 2006, concluded the Net Energy Balance of corn based Ethanol was positive and that some of the data and assumptions of Pimentel and Patzek's studies were so poorly documented that it was not possible to evaluate their quality._Bill USA}

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.. and perhaps the best, most detailed examination of Big Oil's various techniques of keeping E85 out of stations selling their respective petroleum products (The problem is the independent stations. The company owned stations are no problem. They are controlled by the corporation, so no E85 pumps will be found on their premises) - is presented in the Wall Street Journal article published back in April, 2007:

Fill Up With Ethanol? One Obstacle Is Big Oil[div style="border: 1px solid #000000;" class="excerpt"]
{this is a fairly long, detailed article and excerpting four paragraphs really does not do the article justice. Anybody who is really interested in learning something re how Big Oil has successfully restricted ethanol availability should read the original article_Bill USA}

http://online.wsj.com/news/articles/SB117547886199856472

Oil companies lose sales every time a driver chooses E85, and they employ a variety of tactics that help keep the fuel out of stations that bear the company name. For instance, franchises sometimes are required to purchase all the fuel they sell from the oil company. Since oil companies generally don't sell E85, the stations can't either, unless the company grants an exception and lets them buy from another supplier.

Contracts sometimes limit advertising of E85 and restrict the use of credit cards to pay for it. Some require that any E85 pump be on a separate island, not under the main canopy.

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A ConocoPhillips cop +0.25% memo to franchisees says the company doesn't allow E85 sales on the primary island, under the covered canopy where gasoline is sold. Stations must find another spot. As a result, it isn't quite as simple for a driver to decide on the spur of the moment to fill up with E85. ConocoPhillips declines to comment.

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More Expensive

Another Chevron recommendation makes it much more expensive for a station to offer E85 at all. Stations usually have three tanks, for the three gasoline grades, regular, mid-grade and premium. The easiest way to offer E85 in addition to these three is to convert the mid-grade tank to E85. Such a station can still offer mid-grade gasoline, because a "blender pump" can mix some regular with some premium, and mid-grade will come out of the hose.

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