CFA Research Examines Big Oil v. Ethanol

The Consumer Federation of America (CFA) published a July 2007 research study entitled Big Oil v. Ethanol: The Consumer Stake in Expanding the Production of Liquid Fuels.  The research, compiled by CFA Director of Research, Mark Cooper, examines  serious problems in the petroleum refining sector and some of the key aspects of expanding ethanol production.

The report summarizes that record gas prices at the pump are ultimately due to a shortage of refinery capacity, not the price of crude oil.  In addition, recent ethanol policy is said to be posing a challenge to the market power of oil companies.

According to the report, “The oil industry threats to offset increases in ethanol production with cutbacks in refinery expansion plans and policies to restrict ethanol distribution are serious and demonstrate their unchallenged market power and their ability to limit competition which could help consumers obtain lower prices for gasoline and diesel fuel.”

The report sites several newspaper articles, such as a Wall Street Journal piece entitled, “Fill Up With Ethanol?  One Big Obstacle is Big Oil.”

According to the Wall Street Journal article, “Oil companies lose sales every time a driver chooses E85, and they employ a variety of tactics that keep the fuel out of stations that bear the company name.”

The report utilizes charts and information published by the Renewable Fuels Association (RFA).

The full research report can be read on the Internet at: http://www.consumerfed.org/pdfs/Ethanol.pdf