Posted on: October 10, 2013 in Ethanol, Gas Prices, Oil

Apparently, the Wall Street Journal’s zealous defense of the oil industry knows no bounds. In its most recent polemic criticizing biofuels (The Ethanol Enforcers, 10/08/13), the Journal’s Editorial Board takes the incongruous position that anti-competitive behavior by oil companies is a good thing, and takes Members of Congress to task for simply asking that such behavior be investigated. Really?

Ethanol is less expensive than gasoline, and according to Phil Verleger, a petroleum industry analyst, it has saved consumers an average of $1.00 per gallon. Oil companies should be maximizing its use in gasoline, not limiting it. But that’s not what’s happening. To protect their market share, refiners are using their control of the fuel distribution infrastructure to deny consumers choice. The WSJ says that is happening because there is not enough demand. But here are the facts. Less than 2.5% of the light-duty passenger cars and trucks use diesel fuel. Yet diesel is sold at 52% of retail stations across the country. Premium fuel is required by ~10% of the fleet, but premium is sold at 87% of retail stations today. By contrast, 9-10% of the cars on the road today are flex-fuel vehicles capable of running on E85 (a blend of 85% ethanol). But E85 is only offered at 2.5% of the nation’s gas stations.

This debate isn’t about subsidies. Ethanol receives NO subsidies, only oil companies enjoy taxpayer help for their drilling operations these days. This debate is about whether consumers will be provided choice at the pump. One brave retailer in Kansas actually paid Phillips 66 more than $450,000 to get out of a repressive supply agreement that prevented him from offering alternative fuels. Bravo to him and to the Members of Congress fighting for consumers and lower gasoline prices.

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