Oil groups seek RFS waiver

Oil groups seek RFS waiver

Senators call for investigation into alleged anticompetitive practices by oil companies limiting use of renewable fuels.

THE American Petroleum Institute (API) and the American Fuel & Petrochemical Manufacturers (AFPM) filed a joint petition with the Environmental Protection Agency for a partial waiver to lower the amount of ethanol that must be blended into the U.S. gasoline supply in 2014.

The petition requests that EPA reduce the required amount of ethanol and other renewable fuels to less than 10% of gasoline demand. EPA has 90 days to review the petition.

This latest request marks the third attempt to waive the eight-year-old renewable fuel standard (RFS). Two prior petitions — first by Texas Gov. Rick Perry in 2006 and then by nearly a dozen states last year — were both rejected.

API downstream group director Bob Greco said the move is designed to protect consumers and the U.S. economy.

"The RFS is broken beyond repair, and we are calling on the EPA to use its waiver authority to provide a stop-gap measure for this unworkable mandate," Greco said. "Higher ethanol requirements could lead to a reduction in the domestic fuel supply, increased costs and severe harm to the U.S. economy."

According to a study by NERA Economic Consulting, the RFS and its blending requirements could drive up diesel costs by 300% and gasoline costs by 30% by 2015, the petition notes.

"The actions of API and AFPM are designed with one goal in mind: to eliminate any competition from clean, green biofuels in the liquid transportation fuels marketplace," Growth Energy chief executive officer Tom Buis said in a statement.


Investigation sought

Sens. Amy Klobuchar (D., Minn.) and Chuck Grassley (R., Iowa) called on the U.S. Department of Justice and Federal Trade Commission (FTC) to investigate possible anticompetitive practices by oil companies that limit consumer access to homegrown renewable fuels.

In a letter to Attorney General Eric Holder and FTC Chair Edith Ramirez, Klobuchar, chair of the antitrust subcommittee, and Grassley, ranking member of the Senate Judiciary Committee, urged the Administration to take action to address recent reports indicating that oil companies may be undermining efforts to distribute renewable fuels, including higher ethanol/gasoline blends, that help boost the nation's energy security and lower the price of gas for consumers.

In a response letter, Ramirez told the senators that FTC will evaluate their concerns, noting, "I can assure you that we will evaluate the information you have provided and the concerns you have expressed under pertinent antitrust standards."

The letter from Klobuchar and Grassley cites 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 fuels. Station owners who wish to sell renewable fuels would bear the cost and logistical burden of having to install additional infrastructure to do so.

In one case, an oil company is alleged to be using its franchise agreements to preclude franchisees from offering higher-level ethanol blends to their customers.

"By forcing a franchisee to carry premium gasoline as a condition of carrying regular gas, the oil company may be using its economic power over its franchisee to effect a tying arrangement in violation of the Sherman Act," the senators wrote.

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.

"The promise of renewable fuels is rapidly becoming a reality and introducing much-needed competition to the transportation fuels sector. Given the implication these alleged activities, if true, could have on competition in the marketplace, we urge you to investigate them and consider whether any action is necessary," the senators wrote to Holder and Ramirez. "We look forward to working with you to ensure that Americans can continue to realize the benefits of cheaper, cleaner renewable fuel."

In their joint statement, Grassley and Klobuchar expressed their appreciation for FTC's decision to look into the allegations and said they await the conclusions.

Volume:85 Issue:34

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