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September 04, 2013
Senators seek inquiry into anti-RFS allegations

Two senators from corn-belt states have written to U.S. Attorney General Eric Holder and Federal Trade Commission Chair Edith Ramirez, asking for an investigation into “allegations” that the petroleum industry is intentionally blocking development of the retail infrastructure needed to sell renewable fuels to the public.

The federal renewable fuel standard (RFS) was instituted under the 2007 Energy Independence and Security Act (EISA) to promote the development and use of domestic renewable fuel.  There is significant disagreement on the results of the program.

“Since its inception, the RFS has helped to decrease oil imports and increase our energy security while reducing the price of gasoline for American consumers,” state Senators Chuck Grassley (R-IA) and Amy Klobuchar (D-MN) in their letter.

This view is not shared by the American Petroleum Institute (API), which describes the RFS as “broken beyond repair.”  The API recently filed a waiver request to the EPA to lower the ethanol mandate to below 10 percent of gasoline demand for 2014.  According to the API, this will help keep down increases in the cost of fuel, which the API says may reach 300 percent for diesel and 30 percent for gasoline by 2015, both largely attributable to the RFS.

Retail infrastructure

In their letter, Grassley and Klobuchar state that they have heard allegations that the oil industry is mandating retailers to carry and sell premium gasoline, thereby blocking the use of the current retail infrastructure to sell renewable fuel.  This means that station owners who wish to sell renewable fuel would bear the cost and logistical burden of installing additional infrastructure to do so. 

“In one case, an oil company is alleged to be using its franchise agreements to preclude franchises from offering higher level ethanol blends to their customers,” states the letter.  “By forcing a franchisee to carry premium gasoline as a condition of carrying regular gas, the company may be using its economic power over its franchisee to effect a tying arrangement in violation of the Sherman [Antitrust] Act.  This conduct may also violate the Gasohol Competition Act of 1980, which prohibits discrimination or unreasonable limits against the sale of gasohol or other synthetic motor fuels.”

Other than saying it was reviewing the letter, the API had no comment.

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