WASHINGTON – Senator Chuck Grassley last night compared Big Tobacco’s 1994 sworn testimony before a House Subcommittee to sworn testimony made by Big Oil before the Senate Judiciary Committee earlier this year. Grassley questioned the accuracy of their testimony following a Wall Street Journal article revealed inconsistencies in their policies toward alternative fuels.
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What I’m afraid of is that these companies aren’t serious about expanding the availability and use of alternative fuels,” Grassley said. “If you take a close look at the E-85 stations in my home state of Iowa, it’s rather telling. There are approximately 65 stations in Iowa selling E-85 today. Only one of those 65 stations is a major branded station.”
Earlier this month
Grassley sent letters to Exxon, British Petroleum, Chevron and Conoco Phillips asking for an explanation of their statements at a March 14, 2006 Senate Judiciary Committee hearing. At the hearing, all four representatives of the companies indicated their support for allowing E-85 to be sold at their company’s gasoline stations. But, as Grassley indicates in his letter, a Wall Street Journal article provided several details of obstacles each company apparently uses to prohibit or strongly discourage the sale of alternative fuels.
Grassley has taken the lead in enacting legislation that includes tax incentives for the production of homegrown ethanol and biodiesel. The 2005 energy bill included an extension of the small ethanol producer tax credit. A tax credit for biodiesel, similar to that of ethanol, was also included in the energy bill. Grassley also led the effort to include a provision that allows taxpayers to claim a 30 percent credit for the cost of installing clean fuel vehicle refueling stations. This would include pumps for both E85 and B20.
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Here is a copy of Grassley’s speech.
Mr. President,
Across the country, American families and businesses are suffering from the economic impact of rising gasoline prices.
As many families begin to plan their summer vacations, they’re being forced to dig deeper in their pockets to fill up the family car.
The rising cost of gasoline is a result of many factors. Global demand for crude oil and refined products is up.
The Organization of Petroleum Exporting Countries has curtailed some production. Refineries are off-line for maintenance or have experienced outages. As a result, they’re operating at 5-10 percent below normal.
Once again, refinery outages have coincidentally occurred just as the summer driving demand kicks into gear. This has led to record prices of over $3.15 a gallon.
The impact of these increased prices is being felt around the country by working families, farmers, businesses and industries. The increased cost for energy has the potential to jeopardize our economic security and vitality.
And, because we’re dependent upon foreign countries for over 60 percent of our crude oil, our dependence is a threat to our national security.
In recent years many members of the U.S. Senate have touted the value of increasing our domestic energy resources.
Increasing domestic resources, both from traditional and alternative sources is good for our economy and our national security.
Diversity of supply can go a long way toward reducing the impact of price spikes and volatility.
That’s why I’ve been such an ardent supporter of the development of domestic renewable fuels. Each gallon of homegrown, renewable ethanol is one gallon of fuel we’re not importing from Iran or Venezuela.
Just in the past few years, domestic ethanol production has grown tremendously. We’re currently consuming about five billion gallons of ethanol annually.
With all the new ethanol biorefinery’s under construction, we’ll be producing as much as eleven billion gallons annually by 2009. Ethanol’s contribution is a significant net increase to our nation’s fuel supply. But, as the industry grows, it’s imperative that higher ethanol blends be available to consumers. Today ethanol is used primarily as a blend component in amounts up to 10 percent.
We’re quickly approaching a time when ethanol will be produced in a quantity greater than that needed for the blend market. We must continue on this path of reducing foreign oil dependence and greater renewable fuel use.
To do that, it’s critical that we develop the infrastructure and demand for E-85, an alternative fuel comprised of 85 percent ethanol.
Our domestic auto manufacturers are leading the effort to expand the flex-fuel market. The domestic automakers have produced approximately 6 million flex-fuel vehicles over the past decade.
In a visit to the White House in March of this year, the CEO’s of Ford, General Motors and Daimler Chrysler committed to double their production of E-85 vehicles by 2010. By 2012, they committed to have 50 percent of their production vehicles E-85 capable.
This is a highly achievable goal with very little impact on consumers. U.S. automakers have indicated that the additional cost of a flex-fuel vehicle is a mere $200 per car.
However, an important component of the alternative fuel market is ensuring that the fuel is available to consumers.
The ethanol industry is working hard to increase production of the fuel. The automakers are ramping up production of the vehicles. They’re doing their part.
But where’s the oil industry? What have they done to ensure the robust growth of the alternative fuels market?
Well, Mr. President, it appears they’ve been less than helpful.
In April, an article appeared in the Wall Street Journal which detailed many of the obstacles the major oil companies use to block service stations from selling E-85.
Now, imagine my surprise when I read this story, because just over a year ago, I questioned many of the CEO’s of the major oil companies on this very issue.
The CEO’s of Exxon Mobil, British Petroleum, Chevron, Conoco Phillips and others testified before the Senate Judiciary Committee under oath.
I’d remind my colleagues of a very similar hearing that took place with the CEO’s of seven major tobacco companies back in 1994.
At that hearing, our colleague, Senator Wyden, went down the line of CEO’s and asked each of them whether they believed that nicotine or cigarettes were addictive.
We all know how that hearing went, with each CEO testifying that nicotine was not addictive, when in fact it was.
Here’s a photo of the 1994 tobacco hearing, and a photo of the March 2006 Big Oil hearing.
Much like my colleague Senator Wyden questioned the tobacco executives, I questioned the oil executives about their policies regarding alternative fuels.
I asked the CEO’s quite clearly if they would commit to allow independent owners of branded stations to sell E-85 or B-20.
I also asked them if they would allow those station owners to purchase the alternative fuel from any outlet.
Each of the CEO’s testified that they were perfectly willing to allow the sale of alternative fuels at their stations.
Exxon Mobil CEO Rex Tillerson stated, “we’ve denied no request from any of our dealers who have asked for permission to sell unbranded E-85. We’ve granted every request by our dealers who wanted to install separate pump facilities under their canopy for E-85.”
Mr. David O’Reilly, the CEO of Chevron responded similarly, stating that E-85 was already available at Chevron stations and that it was available under the canopy. He offered with pride that Chevron was probably the largest seller of ethanol.
According to the CEO for British Petroleum, all of BP’s 8,900 independently operated stations are free to deploy E-85.
And finally, the CEO for Conoco Phillips simply associated himself with the comments of the other witnesses.
Mr. President, I ask unanimous consent that the relevant pages of the March 14, 2006, Senate Judiciary Transcript be inserted in the Record.
So, the CEO’s of the major integrated oil companies testified under oath before the Judiciary Committee stating their willingness to allow independent stations to offer E-85.
But the Wall Street Journal told a much different story. It highlighted tactics used by the big oil companies to block alternative fuel.
The obstacles include contracts restricting the purchase by the station owners of the alternative fuel. They also require the installation of completely separate pumps, sometimes far from the main canopy.
In many cases station owners are prohibited from advertising the product or the price of the fuel.
British Petroleum goes so far as to prohibit station owners from placing signs that include E-85 on gasoline dispensers, perimeter signs or light poles.
These tactics don’t sound consistent with a company whose marketing slogan is “beyond petroleum.”
The big oil companies on many occasions sited “customer confusion” as the rationale for their policies. Or, that they don’t want to “deceive their customers” about the product. I happen to believe it has more to do with limiting the availability and sale of alternative fuels much more than customer deception.
So, earlier this month, I wrote a letter to these oil company CEO’s and pointed out the contradictions in their testimony and the allegations made by the Journal.
I ask unanimous consent that my letters to the CEO’s of Exxon Mobil, British Petroleum, Conoco Phillips and Chevron be printed in the Record.
In my letters, I asked for an explanation of their policies that are seemingly used to block alternative fuels. I hope to get a thorough explanation as to why these CEO’s led me, the Senate Judiciary Committee Members, and the American people to believe they support making E-85 available to their customers.
What I’m afraid of Mr. President, is that these companies aren’t serious about expanding the availability and use of alternative fuels.
I say this for a couple reasons. First, if you take a close look at the E-85 stations in my home state of Iowa, it’s rather telling.
There are approximately 65 stations in Iowa selling E-85 today. Only one of those 65 stations is a major branded station.
While a vast majority of the 170,000 gasoline stations across the country are branded by major oil companies, only 1 of the 65 E-85 pumps in Iowa is at a station branded with a Big Oil logo.
The second reason I’m skeptical of Big Oil’s claims comes straight from the words of their chief lobbyist.
The head of the American Petroleum Institute, Red Cavaney, recently stated that there’s not enough ethanol or flexible-fuel vehicles available to economically justify widespread installation of E-85 pumps.
For arguments sake, let’s assume that’s an accurate statement. Why then would Big Oil undertake such an effort to block independent station owners from deciding for themselves whether to invest in the infrastructure?
If Big Oil sees no competitive threat from E-85 pumps, why not just let the independent minded station owners decide if there is a demand for the product?
Why erect all these discriminatory tactics if you believe there’s no threat from alternative fuels?
In conclusion, Mr. President, if our nation is serious about reducing our dependence on fossil fuels and imported crude oil, more must be done to expand the infrastructure.
America’s farmers are demonstrating daily their desire to reduce our dependence on foreign oil.
I look forward to hearing from the Big Oil companies on what they’re doing to help.