Big Oil Robs Consumers Of Choice

The Hill

July 16, 2014

By Sens. Chuck Grassley and Amy Klobuchar

It’s vacation season across America. That means family road trips are underway and the traveling public is paying even closer attention when they pull up to the pump.

America’s road warriors have long cherished affordable gas prices. Today’s drivers also value clean-burning fuel choices that help the environment and boost America’s energy independence.

Look back four decades through the rearview mirror.

History shows how the 1973 oil embargo exposed the economic risks and geopolitical vulnerabilities associated with perilous dependence on foreign oil. While gas shortages roiled consumers, the embargo gripped the U.S. economy and foreign policy with steep consequences.

Since then, policymakers have worked to bring greater stability to U.S. energy security, through the creation of the Strategic Petroleum Reserve and more domestic production, conservation (fuel economy standards) and diversification, including incentives for homegrown, clean-burning, renewable biofuels.

Most recently, Congress created the Renewable Fuel Standard (RFS), in 2005, to promote the development and use of domestic renewable biofuels. We also supported the law’s expansion in 2007 to bring 36 billion gallons of renewable fuels online annually by 2022.

The federal law has helped to displace oil imports, increase domestic energy security, create jobs in rural America, curb pollution with cleaner-burning fuel and lower prices at the pump for consumers. Pure and simple, the RFS is good for America’s energy, as well as its environmental and economic stability.

In recent years, Congress also has enacted provisions to promote the installation of blender pumps at gas stations nationwide, providing consumers with a greater choice of fuels.

Still, the nation’s energy policy is running into some bumps in the road. For starters, the Environmental Protection Agency last fall pitched a misguided proposal to greatly reduce the RFS for fiscal 2014. The proposed rule would lower the volume targets for advanced biofuels from 3.25 billion gallons to 2.2 billion gallons. This proposal is causing uncertainty that could scare off future investments in this promising, innovative industry.

Biofuels also are facing stiff resistance from Big Oil. This time, it’s not OPEC putting a stranglehold on the marketplace. It is instead the powerful oil industry that, reports show, is blocking the pipeline for biofuels to get to market.

Last fall, we asked the Department of Justice and the Federal Trade Commission (FTC) to investigate possible anticompetitive practices by the oil industry. We shared concerns we heard that oil companies allegedly are mandating retailers carry and sell premium gasoline, which prevents the retailer from selling renewable fuels without installing expensive infrastructure upgrades. By forcing a franchisee to carry premium gasoline as a condition of carrying regular gas, the oil company may be using its economic power to leverage unreasonable, discriminatory arrangements that are in violation of federal laws. The Department of Justice and the FTC responded with assurances that they are taking steps to identify, prevent and prosecute practices in the petroleum markets that violate anticompetitive or fraudulent business practices.

It’s a long-standing tactic for these big international oil companies. On the one hand, Big Oil argues that the RFS is broken because the industry says it can’t mix the higher blends. On the other hand, those same companies appear to be doing everything they can to prevent any widespread investment in infrastructure by their franchisees and smaller stations that are buying and selling their gasoline.

Big oil companies can cry crocodile tears, but it’s their self-inflicted actions that are standing in the way of meeting the requirements of the RFS, not ethanol producers. Big Oil can’t argue it should be repealed because it doesn’t work when Big Oil is the one responsible for ensuring that consumers don’t have the choice for higher ethanol blends.

That’s why we kindly suggest the decision-makers at the Justice department and the FTC take a close look at a recent investigative study conducted by the Renewable Fuels Association. Its fact-finding analysis shows how oil companies appear to be blocking the sale of greater volumes of renewable fuels through bullying business tactics. Big Oil likes to say it has no control over what’s offered at the pumps of retail gas stations and franchisees — but the facts say otherwise.

The report’s “Consumer Choice Report Card” shows less than 1 percent of branded stations offer E15 or E85. Specifically, of nearly 48,000 retail gas stations carrying a “Big Five” oil company brand, fewer than 300 offer E85 or E15. That flunks any reasonable standard of fairness in the marketplace. The report flushes out fuel supply contracts, franchise agreements and other documents that show how Big Oil flexes its authority to undermine the sale of E85 and E15 renewables.

Tellingly, according to the report, independent stations are four to six times more likely to offer E85 and 40 times more likely to offer E15 than stations selling a “Big Five” oil brand. It would be foolish to view these findings as a fluke. Facts are hard to fabricate.

America has mapped out a long-term strategy to pump up competition in the transportation fuels sector, secure innovative, cleaner renewable fuels to protect the environment and boost more domestic oil production to help immunize the economy and consumers from dependence on foreign oil.

Let’s not let Big Oil spoil the route to greater, cleaner energy independence. U.S. energy security is not for sale. It’s time to hand over the keys to consumers and let renewables and traditional fossil fuels compete side by side at the pump.