Thursday, July 26, 2007

Big Oil's War on Ethanol

CFA Consumer Federation America Food vs FuelThe 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.

Source: Consumer Federation of America


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1 comment:

Lars H. F. said...

That clearly sounds like a threatening development and is probably why one of the Heritage Foundation's five key proposals for US energy security demands to lessen America's dependency on oil.

As you appear to have a high degree of knowledge regarding these matters, you are more than welcome to comment on today's article on the Atlantic Community, which also presents four additional key principles of energy policy as proposed by the Heritage Foundation.

Check it out: Five Principles for US Energy Security