WASHINGTON -- Ethanol supporters have long charged that Major Oil has tried to block more retailers from selling higher blends of the biofuel. With a new report by ethanol advocacy group Renewable Fuels Association (RFA), this allegation is gaining some traction, including among members of Congress.
Oil industry groups such as the American Petroleum Institute (API) contend that low consumer demand for E85 and E15 is preventing their greater adoption by retailers. NACS has cautioned retailers about selling E15, warning that despite the fact the Environmental Protection Agency (EPA) has approved its use in vehicle models 2007 and newer, there are still significant liability risks.
The RFA released a report card this week that grades large retail gasoline chains on their E85 and E15 offering. Among those retailers scoring A+ for offering E85 or E15 at 25% or more sites were Kum & Go, Kwik Trip, Thorntons, Spinx, Rebel Oil, Break Time (MFA), MFA Oil and Meijer Gas. Chains that earned an A for selling the blends at 16% to 25% of sites were Super Pantry, Bosselman's Pump & Pantry, Petro Serve USA and Road Ranger.
Speedway, owned by Marathon Petroleum Corp. (MPC), was the only oil company-affiliated brand to rank hear the top, earning an A-, along with Holiday Stationstores and Fast Stop for selling E85 or E15 at 11% to 15% of locations.
Most of the major and independent oil company brands, meanwhile, scored an F in the RFA study for selling E85 or E15 at less than 1% of their sites, including ConocoPhillips, BP, Chevron, Shell, CITGO, Sunoco, Sinclair, ExxonMobil, Hess, Alon, Murphy Oil, Tesoro, Gulf and Texaco. Marathon, the fuel distributor brand of MPC, also earned an F.
Several of the industry's largest independent chains also earned low grades, with Sheetz scoring a D for selling E85 or E15 at only 1% to 2% of its sites, and Casey's General Stores, The Pantry, 7-Eleven, RaceTrac, Wawa and QuikTrip among those earning an F.
According to RFA, of the almost 48,000 gas stations flying a "Big Five" major oil brand, only 0.6% sold E85 or E15, and only 1.4% of those branded by other oil refiners. Meanwhile, 2.3% to 3.5% of the 74,000 independent stations sell higher ethanol blends. This makes them four to six times more likely to offer E85 and 40 times more likely to offer E15, the report found.
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The RFA believes much of this dynamic is due to onerous supply contracts between branded retailers and their suppliers that make selling E85 and E15 nearly impossible. Among the many charges, the group cites clauses that can require exclusivity; allow distributors to sell only fuels available from the supplier; and require that multiple grades of gasoline be available at all times, which would make storing E85 or E15 unfeasible. It also blames franchise and branding agreements that mandate "intimidating" warning labels on E85 and E15 dispensers, discouraging customers from using the fuels, and that require expensive and unnecessary equipment to be installed before selling the higher ethanol blends.
In response to the RFA scorecard, ethanol state legislators are stepping up calls for the Federal Trade Commission (FTC) to intervene. Senators Amy Klobuchar (D-Minn.) and Chuck Grassley (R-Iowa) have asked the FTC to evaluate the RFA's allegation that oil companies could be involved in anticompetitive practices.
"Homegrown renewable fuels help spur innovation in our economy and strengthen our country's energy security," said Klobuchar. "That's why I've called on the [FTC] to investigate possible anticompetitive practices by oil companies that block these fuels from making it to consumers. This new report underscores the need for the FTC to look into these allegations, and I will continue pushing to ensure that consumers have access to the cheaper, cleaner fuels they deserve."
"Gas stations are in the business of selling fuels people want, and consumers have rejected high ethanol blends because they lower gas mileage and cost more over time," API spokesperson Carlton Carroll told CSP Daily News. "Over 95% of retail stations are independently owned, not by major refiners, and the decision to invest in E85 or E15 infrastructure falls on independent stations owners. It is difficult for independent business owners to justify costly infrastructure investments for fuels that American consumers have rejected."
This war of words is occurring as the EPA finalizes its requirements in the Renewable Fuel Standard (RFS) for blending alternative liquid fuels such as ethanol into the country's fuel supply. For the first time, the EPA has proposed lowering the volumes of ethanol to be blended into gasoline in response to concerns that not enough fuel is being consumed to meet the original, higher mandated volumes--in effect, gasoline has hit a "blend wall." But ethanol supporters charge that the oil industry has manufactured this crisis by making it harder for retailers to sell higher ethanol blends.