Klobuchar, Grassley call for antitrust investigation of Big Oil

By Erin Voegele | August 21, 2013

Sens. Amy Klobuchar, D-Minn., and Chuck Grassley, R-Iowa, have issued a letter to the U.S. Department of Justice and Federal Trade Commission asking for an investigation of anticompetitive practices by oil companies that limit consumer access to renewable fuels, specifically higher ethanol blends.

In the letter addressed to Attorney General Eric Holder and FTC Chairwoman Edith Ramirez, Grassley and Klobuchar express concern that oil companies are engaging in anticompetitive practices with the goal of blocking consumer access to renewable fuels. They urge the DOJ and FTC to open an investigation into the allegations, and determine if antitrust laws have been violated.  

“Faced with growing competition from new sources of fuel promoted by the [renewable fuel standard (RFS)], the oil industry has publicly stated their goal of repealing the RFS,” Grassley and Klobuchar write in the letter. “At the same time we have heard reports that oil companies are taking steps to undermine efforts to distribute renewable fuels that could help meet the RFS requirement.”

Within the letter, the senators point to allegations that the oil industry has mandated retailers to carry and sell premium gasoline, an action that would require station owners that want to sell biofuels to bear the cost and logistical burdens to install additional infrastructure. Klobuchar and Grassley also highlight allegations that at least one oil company has used franchise agreements to prevent its franchisees from selling higher level ethanol blends.

“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,” Grassley and Klobuchar continued in the letter. “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 American Coalition for Ethanol has spoken out to praise the action taken by Klobuchar and Grassley. “If we had more lawmakers like Senators Grassley and Klobuchar, maybe Big Oil’s attacks wouldn’t be taken so seriously in Washington,” said Ron Lamberty, senior vice president of ACE. “As a fuel station owner, every time I hear some Big Oil mouthpiece saying we should ‘let the market decide’ how much ethanol is used, I think of these kinds of restrictions the oil companies have been jamming down station owners’ throats for decades, making sure only one decision is possible - oil.  Senators Grassley and Klobuchar are right.  This year alone, Big Oil has spent millions on ads to convince consumers and Congress that they don’t want E15 or other ethanol blends that they’ve never been allowed to try, and to make that distortion appear real, oil companies have done everything they can to make sure station owners are never allowed to sell the fuel, and consumers are never allowed to buy it.”

Growth Energy has also commended Klobuchar and Grassley for their letter. “Renewable fuels are already transforming the domestic fuel supply for the better, providing lower gas prices, improving the environment and freeing the nation from our dependence on foreign oil,” said Tom Buis, CEO of Growth Energy. “America needs legislation like the renewable fuel standard, and strong advocates like Senators Grassley and Klobuchar, to ensure that renewable fuels deliver what Americans want: a less expensive, cleaner and safer fuel alternative. For too long we have been subjected to the oil industries near monopoly on the liquid fuels market. And, finally, thanks to the actions of our supporters, we have an opportunity to put a spotlight on the dishonest practices of Big Oil and put an end to their controlling behavior, creating the opportunity to break free and allow American consumers a choice and savings at the pump.”