[Congressional Record Volume 153, Number 85 (Wednesday, May 23, 2007)]
[Senate]
[Pages S6539-S6543]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENERGY
Mr. GRASSLEY. Mr. President, I am going to talk about an energy
issue. I am sure people listening, and my colleagues, might think I am
talking about an energy issue because gasoline is at the highest price
it has ever been in the history of the country. I assure you I would be
giving these remarks even if the price of gasoline was only $1 a
barrel, because it involves, in an overview, testimony that was given
by oil company executives before the Judiciary Committee some time ago.
What is being reported are policies of oil companies. I have become
aware of an article in the Wall Street Journal. So I am going to be
referring, during my remarks, to evidence I got from the Wall Street
Journal, letters that I have sent to the CEOs of major oil companies,
and testimony that was given before the Judiciary Committee of the
Senate--I might say that it was sworn testimony--and what I consider to
be some inconsistencies. I will be referring to that testimony from the
record.
I will be referring to the letters I have sent to the CEOs. As an
overview, I am going to be pointing out inconsistencies between sworn
testimony and what oil company executives say are their company
policies regarding ethanol, and particularly the 85-percent ethanol
that we call E85; and then, of course, letters I sent to the oil
companies, raising questions that were raised because of this article,
to have the oil companies give me their story, in case this article was
wrong.
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 are being forced to dig
deeper into 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 way up constantly, as a
result, driving up the price. The Organization of Petroleum Exporting
Companies--what the people of this country know as OPEC--has curtailed
some production. Refineries are offline for maintenance or have
experienced outages. As a result, these refineries are operating at 5
to 10 percent below normal.
Once again, refinery outages have, coincidentally, occurred just as
the summer driving demand kicks into gear, and this has led to an
average price of over $3.15 a gallon as a national average. In my State
of Iowa, I think it is $3.33 today.
The impact of these increased prices is being felt across the country
by working families, farmers, businesses, and industry. The increased
cost for energy has the potential to jeopardize our economic security,
our economic vitality.
Because we are dependent upon foreign countries for over 60 percent
of our crude oil, our dependence on them is a threat to our national
security.
In recent years, many Members of the Senate have touted the value of
increasing our domestic energy resources. I have been one of those--
particularly for ethanol and particularly for biodiesel. In Iowa, I am
the father of the wind energy tax credit. Iowa is the third leading
State in the production of electricity from wind energy.
Increasing domestic resources, whether it is ethanol, biodiesel,
wind, biomass, you name it--all of these are from alternative sources
that are good for our economy and particularly good for our national
security. Diversity of supply can go a long way toward reducing the
impact of price spikes and volatility. That is why I have been such an
ardent supporter of the development of these domestic renewable fuels.
Each gallon of homegrown, renewable ethanol or biodiesel is 1 gallon of
fuel that we are not importing from countries such as Iran, or
Venezuela, which are very unpredictable--or Nigeria, where we get 10
percent of our oil, which might be unpredictable because of
revolutionaries there kidnapping American workers, such as they did 2
weeks ago, or German workers over the period of the last year. It is a
very nervous environment we are in.
The supply from the Saudi oil wells to our gas tank is maybe a 17-day
inventory. So any little thing happening, according to the business
pages of the newspaper, causes the price to spike. So I have been an
ardent supporter of these domestic renewable fuels.
In the past few years, domestic ethanol production has grown
tremendously. Right now, we are consuming about 5 billion gallons of
ethanol annually. With all of the new ethanol biorefineries under
construction, we will be producing as much as 11 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 is imperative that higher
ethanol blends be available to consumers. When I say higher ethanol
blends, I mean beyond the 10 percent mixture that we have right now. We
even have cars right now that can burn up to 85 percent ethanol. That
is why we refer to it as E85. That is what we are talking about,
increasing the 10 percent as cars are manufactured, to be able to
consume it without hurting the engine. That is where the automobile
companies are headed. That is where the ethanol industry is headed to
back it up. But the point I will make in a minute is that the
distribution for E85 is a problem, and it looks to me like big oil is a
major part of that problem. That is what I am going to point out.
We are quickly approaching a time when ethanol will be produced in a
quantity greater than that needed for the blend market as we continue
down the road that has been pioneered by Brazil--and that is the best
example--to use cars that will, in fact, burn 100 percent ethanol. For
sure, we must continue on this path of reducing foreign oil dependence
and greater renewable fuel use.
To do that, then, it is critical that we develop the infrastructure
and the demand for E85, an alternative fuel comprised of 85 percent
ethanol, 15 percent gasoline.
Our domestic auto manufacturers are leading the effort to expand what
we call the flex-fuel--meaning flexible fuel--market. Our domestic
manufacturers of automobiles are doing this. Our domestic automakers
have produced approximately 6 million flex-fuel vehicles over the past
decade. In fact, you might be driving a flex-fuel vehicle and don't
even know it, burning 100 percent gasoline, or the 90/10 percent
mixture of gasoline and ethanol. Look at your book. If you can burn
E85, do it--if you can buy it. I am going to point out how that is a
problem--the distribution--and the oil companies' involvement in it.
[[Page S6540]]
In a visit to the White House in March of this year, the chief
executive officers of Ford, General Motors, and DaimlerChrysler
committed to double their production of E85 vehicles by 2010. By 2012,
they committed to have 50 percent of their production of vehicles E85
capable. Listen, there is a big price difference here--$2.85 for E85 a
gallon versus $3.33 for gasoline today. So when they get 50 percent of
their production E85 capable, this is then, as they say, a highly
achievable goal with very little impact on consumers because you can
buy these cars for as little as $200 in additional cost. So you can
burn the E85 as well as 100 percent gasoline. If you would rather pay
more and buy the 100 percent gasoline, you can still burn it in the
same car. This is very inexpensive for the money that can be saved.
However, a very important component of the alternative fuel market is
ensuring that the fuel is available to the consumers. The ethanol
industry is working hard to increase production of ethanol, and they
are on target to have 11 billion gallons in a little while.
The automobile makers are ramping up production of their vehicles. So
everybody seems to be doing their part.
But where is the oil industry? I thought a year ago, when they
appeared before the Judiciary Committee, they were on the road to
cooperating with the distribution of E85, but I read in the Wall Street
Journal quite a different story. So I think I can legitimately ask, if
we got the car manufacturers producing E85 cars that can burn that and
the ethanol industry producing it, where is the oil industry? Because
that is the distribution of this. There is not an independent
distribution of E85. You have to go to your filling station, where you
can buy 100 percent gasoline and have the alternative of filling up
with E85.
What have they done to ensure a robust growth of the alternative
fuels market? Well, Mr. President, it appears they have been less than
helpful. I have referred to this article in the Wall Street Journal. It
details many of the obstacles the major oil companies use to block
service stations from selling E85.
Now, imagine my surprise when I read this story, because just over a
year ago, I questioned many of the CEOs of the major oil companies on
this very issue when they appeared before the Senate Judiciary
Committee about whether there was any sort of violation of antitrust
laws, any sort of collusion. There was a whole range of questions that
were being asked by the members of the Judiciary Committee, wanting to
know if the marketplace is working, because if the marketplace is
working, you cannot have any complaints. But if it is not working, we
have to do something about it. The CEOs of ExxonMobil, British
Petroleum, Chevron, ConocoPhillips, and others testified before this
Senate Judiciary Committee under oath. The bottom part of this picture
depicts the CEOs I named from ExxonMobil, British Petroleum, Chevron,
ConocoPhillips--I will not name them all, the major oil companies
testifying, taking their oath, as they swore to tell the truth in the
Judiciary Committee.
I remind my colleagues of another very famous group of CEOs on the
top of this picture back in 1994 taking the oath to tell the truth to a
House committee. Those are the CEOs of the major tobacco companies. At
that hearing, our great colleague from Oregon, Senator Wyden, who was
then a Member of the other body, went down the line of these CEOs and
asked each of them whether they believed nicotine or cigarettes were
addictive. We all know how that hearing went, with each of the CEOs
testifying that nicotine was not addictive when, in fact, it is. There
is the photo of those CEOs who got themselves in trouble a little bit
later when there was plenty of evidence brought out that they knew what
the situation was with tobacco being addictive and what they did to
make it addictive. Of course, the second photo is from March 2006,
before the Senate Judiciary Committee, of the chairmen of the major oil
companies taking an oath to tell the truth as well.
Much like my colleague, Senator Wyden, when he was a Member of the
House of Representatives asking the tobacco company executives about
tobacco being addictive, I questioned the oil company executives, in
the bottom picture, at the time of this hearing, about their policies
regarding alternative fuels, meaning mostly ethanol. I was leading up
to E85. I asked the CEOs quite clearly if they would commit to allowing
independent owners of branded stations to sell E85 or biodiesel, B20,
which is a 20-percent mixture with petroleum diesel. Remember, as I was
asking them questions, these folks were under oath.
I also asked them if they would allow those station owners to
purchase the alternative fuel from any outlet because if they didn't
sell it and oil companies are not selling ethanol but people who
produce it can, will they let their stations buy it from an independent
outlet. Each of these CEOs, when I asked that question, testified that
they were perfectly willing to allow the sale of alternative fuels at
their stations. ExxonMobil CEO Rex Tillerson stated:
We've denied no request from any of our dealers who have
asked for permission to sell unbranded E85. We've granted
every request by our dealers who wanted to install separate
pump facilities under their canopy for E85.
Mr. David O'Reilly, the CEO of Chevron--I am referring to people who
took an oath to tell the truth, and we can see their picture here--Mr.
David O'Reilly, CEO of Chevron, responded, similarly stating that E85
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 owned stations are free to deploy E85.
Finally, the CEO of ConocoPhillips 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 Committee transcript be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Consolidation in the Oil and Gas Industry: Raising Prices?
Senator Grassley. I want to ask a question of any of you,
and this is in regard to alternative energy. And most of you
know I am a big promoter of ethanol. I have heard stores
after stories about independent owners of franchised or
branded stations who are prohibited from selling alternative
or renewable fuels, so I would like to hear from some of
you--will you commit to allowing independent owners of
branded stations who choose to sell E-85 or B-20 to do so?
Would you allow independent owners to produce alternative
fuels from any outlet so that they can puchase a fuel at the
lowest cost?
Mr. Tillerson. Senator, we have denied no request from any
of our dealers who have asked for permission to sell
unbranded E-85 at their sites. We have asked that they make
it clear that it is not an ExxonMobil product, that we do not
manufacture it, therefore we can't stand behind the quality.
But we have granted every request by our dealers who wanted
to install separate pump facilities under their canopy for E-
85.
Senator Grassley. I would like to hear from other
companies, maybe not all of you, but at least----
Mr. O'Reilly. Senator, I would be willing to say that we
have already asked for. It is already out there. It can be
under the canopy. Same quality issue. I would also add that
we are probably the largest, certainly one of the largest
sellers of ethanol today already.
Mr. Hofmeister. Senator, we are in the same position as has
been described. You may be aware that we are currently
launching a pilot in Chicago, in conjunction with one of the
automobile manufacturers, to test E-85. And I think that is
an important point. E-85 needs to be tested in the
marketplace before we go full-scale into E-85 supply. The
reason for that is we don't fully understand or know the
implications of E-85, and as a major brand, of course, the
provider of that fuel will often be considered liable for
such fuel. And until we understand it, I think we need to
really work at what are the conditions under which this
would be sold.
Senator Grassley. Most of the people I hear complaints from
will assume liability. You don't have to have that liability.
Other companies? Are you willing to cooperate with E-85?
Mr. Klesse. Senator, I would agree with what has been said.
Mr. Pillari. Senator, of our 9,300 stations, 8,900 of them
are independently operated and they are free to deploy E-85.
We are also running a test program on E-85 in California to
test its efficacy and its air pollution impacts, because
California restricts how much ethanol can be used in gasoline
today.
Mr. Mulva. Senator, we have the same comments that you have
heard from the responses from the others already.
Senator Grassley. My time is up, but this business of you
having to test something
[[Page S6541]]
when you have the president of--I think it is the CEO of Ford
on television all the time saying how they are promoting
their E-85 cars, it seems to me if you have the president of
a major corporation like that, that is all the test you need.
Leave it up to the consumer to make the decision.
Chairman Specter. Thank you, Senator Grassley.
Mr. GRASSLEY. So the CEOs of the major integrated oil companies
testified under oath before the Judiciary Committee stating their
willingness to allow independent stations to offer E85. 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
included contracts restricting the purchase by the station owners of
alternative fuel. They also required the installation of completely
separate pumps, sometimes far away from the main canopy, and in many
cases station owners are prohibited from advertising the product or
even posting the price of that fuel, E85. British Petroleum goes so far
as to prohibit station owners from placing signs that include E85 on
gasoline dispensers, perimeter signs, or light poles. These tactics
don't sound consistent with a company--meaning British Petroleum--with
a marketing slogan ``beyond petroleum.''
The big oil companies on many occasions cited ``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 that
it has more to do with limiting the availability of a product that they
don't control and the sale of alternative fuels much more than it is
customer deception.
After I read the Wall Street Journal article, which is so contrary to
what I remember them telling me 1 year, 13 months before, I wrote
letters to the CEOs who testified. Their picture is here. I pointed out
the contradictions in their testimony before the Senate Judiciary
Committee and the allegations that were made in the Wall Street
Journal.
I wish to refer to these letters so my colleagues will know what I
asked them based on this article.
I have a letter to Mr. Rex Tillerson of ExxonMobil. I am not going to
read the whole letter, but I am going to read what I am after here:
In fact, Exxon Mobil's standard contract bars Exxon
stations from buying fuel from anybody but Exxon--a fact you
chose not to disclose to our committee. It also appears that
even in cases where exceptions are made, Exxon requires those
station owners to install entirely separate dispensers. . . .
I refer to a letter I sent to Mr. Robert Malone, chairman of British
Petroleum:
The Wall Street Journal article indicated that BP prohibits
branded stations from including E-85 on gasoline dispensers,
perimeter signs or light poles. Another obstacle employed by
your company is the prohibition of using pay-at-the-pump
credit card machines for E-85 purchases. . . .
That seems to be very contrary to what they told us, that they were
allowing the sale of E85 at their stations.
Mr. James J. Mulva, ConocoPhillips:
The Wall Street Journal article indicated that Conoco
Phillips does not allow E-85 sales on primary islands under
the canopy. This policy directly contradicts the statement to
which you associated yourself during the March 2006 hearings.
And lastly, Mr. David J. O'Reilly, Chevron:
. . . Chevron's agreement with franchisees discourages
selling E-85 under the main canopy and includes policies that
are claimed to prevent franchisees from deceiving customers
as to the source of the product. The Wall Street Journal
article indicated that Chevron recommends that E-85 pumps be
outside the canopy and that Chevron prohibits branded
stations from including E85 on signs listing fuel prices.
I ask unanimous consent that these letters to ExxonMobil, British
Petroleum, ConocoPhillips, and Chevron be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, May 3, 2007.
Mr. Rex Tillerson,
Chairman and Chief Executive Officer, Exxon Mobil
Corporation, Irving, Texas.
Dear Mr. Tillerson: For many years, I've been supporting
and promoting ethanol and biodiesel fuels as a way to reduce
our dependence on foreign and traditional energy sources, and
increase our national security and rural economies. Our
nation is now consuming five billion gallons of ethanol
annually, and is estimated to produce as much as eleven
billion gallons annually by 2009.
In an effort to further reduce America's oil dependence,
it's imperative that higher ethanol blends be available to
consumers. While our domestic auto manufacturers are leading
the effort to expand the flex-fuel vehicle market, more must
be done to expand the fuel's availability. Of the 170,000
stations nationwide, only 1,100 currently offer E-85. This
represents less than one percent of fuel stations.
As you may recall, on March 14, 2006, you testified under
oath before the Senate Judiciary Committee. At the hearing, I
asked if you would commit to allow independent owners of
branded stations to sell E-85 or B-20, and if you would allow
those station owners to purchase the alternative fuel from
any outlet. For your benefit, I've enclosed a copy of the
hearing transcript.
In your response to me, you stated that Exxon Mobil has
denied no request from any dealers who sought permission to
sell unbranded E-85. In addition, you stated that every
request to sell the fuel under the canopy has been granted.
Your testimony before the committee clearly stated that Exxon
Mobil was perfectly willing to allow the sale of alternative
fuels at Exxon Mobil stations. However, a recent Wall Street
Journal article, which I've enclosed, detailed many of the
obstacles your company and other major integrated oil
companies apparently use to effectively prohibit or strongly
discourage the sale of alternative fuels.
In fact, Exxon Mobil's standard contract bars Exxon
stations from buying fuel from anybody but Exxon--a fact you
chose not to disclose to the committee. It also appears that
even in cases where exceptions are made, Exxon requires those
station owners to install entirely separate dispensers, for
the purpose of ``minimizing customer confusion,'' according
to an Exxon spokeswoman. It seems this policy has much more
to do with limiting the availability of alternative fuels
than customer confusion.
I would appreciate hearing your explanation as to why you
led me, the Judiciary Committee and the American people to
believe that Exxon Mobil supports making E-85 available to
your customers, yet your company is described by the Wall
Street Journal as a key obstacle to expanding the
availability of alternative fuels. I would appreciate knowing
exactly what Exxon Mobil is doing to grow the E-85 market,
and why you believe your tactics aren't simply obstacles, as
claimed by the Wall Street Journal.
I look forward to receiving your response not later than
May 25, 2007.
Sincerely,
Charles E. Grassley,
U.S. Senate.
____
U.S. Senate,
Washington, DC, May 3, 2007.
Mr. Robert A. Malone,
Chairman and President, British Petroleum America, Inc.,
Houston, Texas.
Dear Mr. Malone: For many years, I've been supporting and
promoting ethanol and biodiesel fuels as a way to reduce our
dependence on foreign and traditional energy sources, and
increase our national security and rural economies. Our
nation is now consuming five billion gallons of ethanol
annually, and is estimated to produce as much as eleven
billion gallons annually by 2009.
In an effort to further reduce America's oil dependence,
it's imperative that higher ethanol blends be available to
consumers. While our domestic auto manufacturers are leading
the effort to expand the flex-fuel vehicle market, more must
be done to expand the fuel's availability. Of the 170,000
stations nationwide, only 1,100 currently offer E-85. This
represents less than one percent of fuel stations.
On March 14, 2006, Mr. Ross Pillari, former Chairman of BP
America, testified under oath before the Senate Judiciary
Committee. At the hearing, I asked Mr. Pillari if BP would
commit to allow independent owners of branded stations to
sell E-85 or B-20, and if BP would allow those station owners
to purchase the alternative fuel from any outlet. For your
benefit, I've enclosed a copy of the hearing transcript.
In his response to me, Mr. Pillari stated that British
Petroleum was already allowing independently owned stations
to freely deploy E-85. His testimony before the committee
clearly stated that British Petroleum was perfectly willing
to allow the sale of alternative fuels at BP stations.
However, a recent Wall Street Journal article, which I've
enclosed, detailed many of the obstacles your company and
other major integrated oil companies apparently use to
effectively prohibit or strongly discourage the sale of
alternative fuels.
The Wall Street Journal article indicated that BP prohibits
branded stations from including E-85 on gasoline dispensers,
perimeter signs or light poles. Another obstacle employed by
your company is the prohibition on using pay-at-the-pump
credit card machines for E-85 purchases. It seems these
policies are in place simply to limit the availability and
sale of alternative fuels, rather than prevent customer
confusion.
I would appreciate hearing your explanation as to why Mr.
Pillari led me, the Judiciary Committee and the American
people to believe that British Petroleum supports making E-85
available to your customers, yet your company is described by
the Wall Street Journal as a key obstacle to expanding the
availability of alternative fuels. I would appreciate knowing
exactly what BP
[[Page S6542]]
is doing to grow the E-85 market, and why you believe your
tactics aren't simply obstacles, as claimed by the Wall
Street Journal.
I look forward to receiving your response not later than
May 25, 2007.
Sincerely,
Charles E. Grassley,
United States Senator.
____
U.S. Senate,
Washington, DC, May 3, 2007.
Mr. James J. Mulva,
Chairman and Chief Executive Officer, Conoco Phillips
Company, Houston, Texas.
Dear Mr. Mulva: For many years, I've been supporting and
promoting ethanol and biodiesel fuels as a way to reduce our
dependence on foreign and traditional energy sources, and
increase our national security and rural economies. Our
nation is now consuming five billion gallons of ethanol
annually, and is estimated to produce as much as eleven
billion gallons annually by 2009.
In an effort to further reduce America's oil dependence,
it's imperative that higher ethanol blends be available to
consumers. While our domestic auto manufacturers are leading
the effort to expand the flex-fuel vehicle market, more must
be done to expand the fuel's availability. Of the 170,000
stations nationwide, only 1,100 currently offer E-85. This
represents less than one percent of fuel stations.
As you may recall, on March 14,2006, you testified under
oath before the Senate Judiciary Committee. At the hearing, I
asked if you would commit to allow independent owners of
branded stations to sell E-85 or B-20, and if you would allow
those station owners to purchase the alternative fuel from
any outlet. For your benefit, I've enclosed a copy of the
hearing transcript.
In your response to me, you simply associated yourself with
the statements made by the other witnesses. That association
led me to believe that Conoco Phillips was already allowing
independently owned stations to freely deploy E-85 under the
canopy. Your testimony before the committee clearly indicated
that Conoco Phillips was perfectly willing to allow the sale
of alternative fuels at branded stations. However, a recent
Wall Street Journal article, which I've enclosed, detailed
many of the obstacles your company and other major integrated
oil companies apparently use to effectively prohibit or
strongly discourage the sale of alternative fuels.
The Wall Street Journal article indicated that Conoco
Phillips does not allow E-85 sales on the primary island
under the canopy. This policy directly contradicts the
statements to which you associated yourself during the March
2006 hearing.
I would appreciate hearing your explanation as to why you
led me, the Judiciary Committee and the American people to
believe that Conoco Phillips supports making E-85 available
to your customers, yet your company is described by the Wall
Street Journal as a key obstacle to expanding the
availability of alternative fuels. I would appreciate knowing
exactly what Conoco Phillips is doing to grow the E-85
market, and why you believe your tactics aren't simply
obstacles, as claimed by the Wall Street Journal.
I look forward to receiving your response not later than
May 25, 2007.
Sincerely,
Charles E. Grassley,
United States Senator.
____
U.S. Senate,
Washington, DC, May 3, 2007.
Mr. David J. O'Reilly,
Chairman and Chief Executive Officer, Chevron Corporation,
San Ramon, CA.
Dear Mr. O'Reilly: For many years, I've been supporting and
promoting ethanol and biodiesel fuels as a way to reduce our
dependence on foreign and traditional energy sources, and
increase our national security and rural economies. Our
nation is now consuming five billion gallons of ethanol
annually, and is estimated to produce as much as eleven
billion gallons annually by 2009.
In an effort to further reduce America's oil dependence,
it's imperative that higher ethanol blends be available to
consumers. While our domestic auto manufacturers are leading
the effort to expand the flex-fuel vehicle market, more must
be done to expand the fuel's availability. Of the 170,000
stations nationwide, only 1,100 currently offer E-85. This
represents less than one percent of fuel stations.
As you may recall, on March 14, 2006, you testified under
oath before the Senate Judiciary Committee. At the hearing, I
asked if you would commit to allow independent owners of
branded stations to sell E-85 or B-20, and if you would allow
those station owners to purchase the alternative fuel from
any outlet. For your benefit, I've enclosed a copy of the
hearing transcript.
In your response to me, you stated that Chevron was already
allowing station owners to sell E-85, and that it was
available and under the canopy. Your testimony before the
committee clearly stated that Chevron was perfectly willing
to allow the sale of alternative fuels at Chevron stations.
You proudly stated that Chevron is one of the largest sellers
of ethanol. However, a recent Wall Street Journal article,
which I've enclosed, detailed many of the obstacles your
company and other major integrated oil companies apparently
use to effectively prohibit or strongly discourage the sale
of alternative fuels.
In fact, Chevron's agreement with franchisees discourages
selling E-85 under the main canopy and includes policies that
are claimed to prevent franchisees from deceiving customers
as to the source of the product. The Wall Street Journal
article indicated that Chevron recommends that E-85 pumps be
outside the canopy, and that Chevron prohibits branded
stations from including E-85 on signs listing fuel prices. It
seems these policies are in place simply to limit the
availability and sale of alternative fuels, rather than
prevent customer deception.
I would appreciate hearing your explanation as to why you
led me, the Judiciary Committee and the American people to
believe that Chevron supports making E-85 available to your
customers, yet your company is described by the Wall Street
Journal as a key obstacle to expanding the availability of
alternative fuels. I would appreciate knowing exactly what
Chevron is doing to grow the E-85 market, and why you believe
your tactics aren't simply obstacles, as claimed by the Wall
Street Journal.
I look forward to receiving your response not later than
May 25, 2007.
Sincerely,
Charles E. Grassley,
United States Senator.
Mr. GRASSLEY. Mr. President, in my letters, I ask 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 CEOs led me, led the
Senate Judiciary Committee members, and the American people to believe
they support making E85 available to their customers when there is
plenty of evidence that they do not practice what they preach, that
they do not practice what they told our committee under oath.
What I am afraid of is that these companies are not serious about
expanding the availability and use of alternative fuels. I say this for
a couple reasons. First, if one takes a close look at the E85 stations
in my home State of Iowa, it is rather telling. I have a map. What
might look like missiles are ears of corn because ethanol comes from
corn. We have 65 stations in Iowa selling E85 today. Only one of those
65 stations selling is a major branded station, and it is down where
the yellow arrow is--only one of 65.
A second reason I am 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 is not
enough ethanol or flex-fuel vehicles available to economically justify
widespread installation of E85 pumps.
For argument's sake, let's assume that is 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? Let the station owners make that decision. Let's not
have, as this article in the Wall Street Journal implies, all these
obstacles, particularly since we were led to believe when they
testified under oath before our committee that they were fully
cooperating with allowing the installation of E85 pumps. If big oil
sees no competitive threat from E85 pumps, why not just let the
independent-minded station owner decide if there is a demand for the
product? The market will make that decision. Why erect all these
discriminatory tactics if you believe there is no threat from
alternative fuels?
When I get answers to my letters--and I am going to wait until I get
all the answers back before I draw any conclusions--maybe they will say
the Wall Street Journal article is wrong. I hope that is what I find
out and that they did not mislead us under oath when they testified
before the committee.
All I can say is, as I conclude, if our Nation is serious about
reducing our dependency on fossil fuels and imported crude oil, more
must be done to expand the infrastructure for ethanol and particularly
E85. America's farmers are demonstrating daily their desire to reduce
our dependence on foreign oil by producing more corn in the United
States. More acres of corn were planted this year than any time since
1944. And our ethanol industry has invested to make sure we can be less
dependent on imported crude oil.
So I look forward to hearing from big oil companies on what they are
doing to help. I hope I get answers that are contrary to what the Wall
Street Journal said.
[[Page S6543]]
Mr. President, I yield the floor.
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