[Congressional Record (Bound Edition), Volume 153 (2007), Part 10]
[Senate]
[Pages 13623-13627]
[From the U.S. 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

[[Page 13624]]

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.
  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

[[Page 13625]]

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 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.


[[Page 13626]]


  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 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.

[[Page 13627]]

     
                                  ____
                                                  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.
  Mr. President, I yield the floor.

                          ____________________