Lawmakers seek review whether oil companies have stifled use of ethanol

Source: by Christopher Doering, De Moines Register • Posted: Wednesday, August 21, 2013

Senators Chuck Grassley and Amy Klobuchar asked the Justice Department and Federal Trade Commission Tuesday to investigate possible anticompetitive practices by oil companies that may be limiting consumer access to renewable fuels.

In a letter to Attorney General Eric Holder and FTC Chairwoman Edith Ramirez, the Midwest lawmakers told the Obama administration the review was necessary to address “reports indicating that oil companies may be undermining efforts to distribute renewable fuels, including higher ethanol gasoline blends.” Iowa is the country’s largest ethanol producer with 41 ethanol plants that produced 3.7 billion gallons during 2012.

“We are writing to express concerns that oil companies are engaging in anticompetitive practices aimed at blocking market access for renewable fuels,” Grassley, an Iowa Republican, and Klobuchar, a Democrat from Minnesota, said in the letter. “We urge you to investigate these allegations and, if true, whether they violate the nation’s antitrust laws.”

The Renewable Fuel Standard (RFS), a law that requires refiners to buy alternative fuels made from corn, soybeans and other products, calls for 18.15 billion gallons to be blended into the nation’s gasoline supply in 2014 — a figure that will rise to 36 billion gallons by 2022. The 8-year-old law was put in place to help reduce U.S. dependence on foreign energy.

Producers of the corn-based fuel welcomed the investigation.

“There is zero doubt that many oil refiners are doing everything in their power to restrict consumer access to E15 and higher ethanol blends,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association. “They all seek to restrict consumer access to lower cost ethanol blends like E15. So we applaud the senators for asking the relevant agencies to take a close look at this anti-competitive behavior.”

A spokesman with the American Petroleum Institute, which represents more than 500 oil and natural gas companies, said the organization is reviewing the letter.