Trade group requests U.S. probe of oil industry’s efforts to impede renewable fuels

Source: Amanda Peterka, E&E reporter • Posted: Wednesday, March 20, 2013

The Renewable Fuels Association today asked government agencies to begin an investigation into the oil industry’s efforts to block the expansion of ethanol in the marketplace.

In a letter addressed to the heads of U.S. EPA, the Federal Trade Commission, and the Departments of Energy and Agriculture, RFA President and CEO Bob Dinneen called the oil companies’ activities “high anti-competitive.” Their actions, he said, directly undermine several federal laws and work against the government’s efforts to roll out more ethanol through the renewable fuel standard.

“The oil industry is blocking the delivery of alternative fuels in a desperate attempt to maintain its monopoly over the fueling of America’s cars, trucks and light-duty vehicles,” Dinneen wrote. “Just as troubling, Big Oil is actively undermining the delivery of renewable fuel even while simultaneously claiming that it is impossible to meet purposefully increasing RFS mandates.”

The ethanol industry spokesman accused oil companies of violating anti-trust rules by penalizing gas stations that wish to sell E15, or gasoline containing 15 percent ethanol. He listed Zarco 66 Inc., a Kansas gasoline staton that last year became the first station in the country to sell E15, as an example.

According to Dinneen, Zarco expressed an interest in selling E15 after EPA approved it for use in cars of model years 2001 and newer. In response, ConocoPhillips Co. threatened to terminate its contract unless the franchise filled up one of its ethanol tanks — which it uses to blend gasoline and ethanol together — with premium gasoline, a product that is no longer common in the marketplace.

Dinneen also said the oil industry was violating both the Gasohol Competition Act, which makes it illegal to discriminate against synthetic motor fuels, and the Petroleum Marketing Practices Act, which allows gas stations to convert existing tanks for renewable fuel.

Oil refiners have vigorously fought the introduction of E15, both in Congress and in the court, pointing to industry studies linking the fuel to car damage (Greenwire, Jan. 29). They say they’ve directed their gas stations to not sell E15 over those damage concerns and the possibility of misfueling by small-engine vehicles like lawn mowers, boats and snowmobiles. They’re worried about liability issues that could arise over its use.

Trade groups for oil companies, notably the American Petroleum Institute and American Fuel & Petrochemical Refiners, further say that EPA’s approval of E15 is one of many signals that the renewable fuel standard is broken.

In his letter, Dinneen slammed the oil industry’s criticism of the RFS, which dictates yearly levels of traditional ethanol and advanced biofuels that must be blended into the nation’s motor fuel supply.

“Like a child who breaks all of his pencils and then tells his parents he can’t do his homework, the oil industry should not be permitted to claim the RFS is not achievable when it is deliberately taking steps to stifle the introduction of E15,” Dinneen wrote.