RFA Report Details Big Oil's Tactics In Preventing E85, E15 Sales

  • Thursday, 10 July 2014 00:00

The Renewable Fuels Association's (RFA) recent report on current practices by oil companies to block the sale of E85 and E15 is nothing short of explosive. While we've all suspected for some time that oil companies weren't necessarily on the renewable fuels bandwagon, this report details specific practices employed by oil companies to block the availibility of E85 and E15.

The report has made a significant enough impact that it has led Senators Amy Klobuchar and Chuck Grassley, from Minnesota and Iowa respectively, to demand a federal probe to investigate the allegations made by the RFA in the report.

Among the tactics employed by oil companies to prevent and / or discourage the sale of renewable fuels include fuel contracts that require supplier exclusivity and allow distributors to sell only those fuels made available by the supplier.

According the RFA, supply contracts between oil companies and distributors require the distributors to exclusively sell the former's branded fuels. This in turn means that the fuel sold by the distributor to the branded retailer are limited the fuels offered by said oil companies. 

In other words, if those oil companies aren't offering E85 or E15, then there's no chance those branded retailers would be able to offer those biofuels.

Citing a Chevron branded fuel agreement, the RFA quotes, "at no time shall any product not authorized by ChevronTexaco to be sold thereunder be offered for sale or sold under (Chevron) trademarks and trade names."

Another tactic, the RFA said, are contracts between oil companies and marketers or retailers that require minimum sales volumes of branded fuels. This, in turn, means that increasing sales of E85 or E15 would be against the retailer's contract with an oil company if said oil company does not offer E85 or E15. In other words, a retailer could lose its franchise if it doesn't meet the minimum sales volume as stipulated in its contract.

A third tactic are contracts that require multiple grades of branded gasoline to be sold at all times. We see this all the time. But it also means retailers then don't have the storage space to offer E85 or E15. If a retailer is required to carry three grades of fuel (87, 89 and 91), it would have to have two underground storage tanks - one carrying regular E10 and another carrying premium gas (mid-blend 89 is produced by mixing the fuel from both tanks). As such, a retailer would have to incur extra costs to install a separate underground tank for E85.

Then there's E15. Since E15 isn't always readily availble by refiners, the RFA said, some retailers have to blend E15 by combining E10 and E85 pumps. However, if the retailer doesn't have an underground E85 storage tank, selling E15 is not a possibility. 

Another move by oil companies to prevent the sale of E85 or E15 includes requiring its associated retailers to place intimidating warning labels on E85 dispensers in cases where it actually allows the sale of E85. While such warning labels are necessary to prevent consumers from filling up their vehicles with the wrong fuel, the RFA states that some of these labels go a little too far.

In particular, it cites a BP station in Nebraska which carries the following labels above an E85 pump : "WARNING : This product is not supplied by BP, and BP does not guarantee this product" and "Serious Damage can occur to the vehicle if the product is used in a non-compatible vehicle." Yikes. That would scare anyone off.

Cementing the RFA's argument is its score card on oil company branded-stations that offer renewable fuels. Alarmingly, less than 1% of stations that carry brands such as ConocoPhillips, BP, Chevron, Shell, ExxonMobil, Marathon, Sunoco, Murphy Oil, Tesoro, Gulf and Texaco offer E85 or E15.

Read the whole report here