OIL MONOPOLY LIMITS CONSUMER CHOICE, SAVINGS
BLOOMINGTON, Ill.—Illinois is the perfect example of how oil companies control the gasoline marketplace, limit choice, and make sure lower-priced fuels don’t make it to the pump.
Mirroring the national gasoline marketplace conditions revealed in a recently released report, the biggest gasoline retailers in Illinois limit choice, while independent and regional retailers serve their customers well, according to Gary Hudson, Illinois Corn Growers Association President.
“I wasn’t surprised by the Renewable Fuels Association report,” Hudson said. “We see Big Oil’s monopolistic strategies here in Illinois every day.”
The Renewable Fuels Association report pulled back the curtain to reveal that less than one percent of gasoline stations controlled by the so-called Big 5 Big Oil companies offer E85 or E15 at their pumps.
In Illinois, 96 percent of the stations offering higher ethanol blends, including E85 and E15 are regional or independent petroleum marketers.
“The stations in Illinois that are offering more consumer choice at the pump via E85 and E15 know a good thing when they see it,” Hudson explained. “Those other Big 5 retailers that are subject to contracts, licensing agreements, and pressure from Big Oil just don’t offer these less expensive fuels.”
Lawmakers on the Senate Judiciary Committee’s antitrust panel are calling on the Federal Trade Commission to investigate whether these oil industry contract and pricing strategies limit marketplace access to ethanol, thereby harming consumers.
“Oil companies control the majority of gas stations and selling less ethanol and more gasoline means huge profits for them and higher prices for us.”
“Since that’s the case, why would gas stations controlled by oil companies offer ethanol blends?” Hudson asked. “They make more money leaving ethanol out of the mix.”
Current ethanol futures prices at CME Group prove that gas prices should be lower. On July 10, 2014, near the end of the trading day, the August ethanol futures contract was trading some 85 cents lower than the August RBOB gasoline contract.
“It’s in Big Oil’s interest to limit ethanol’s inclusion in gas. Ethanol should be a serious competitor in the marketplace, but the marketplace is run by Big Oil and their monopoly and that effectively shuts out ethanol and the lower gas prices that would come with it,” Hudson explained.
Illinois Corn Growers Association and their sister organization, Illinois Corn Marketing Board, support opportunities to enhance consumer choice at gas pumps in Illinois using higher ethanol blends. Retailers can receive grants to offset the start-up costs of putting in the necessary infrastructure to deliver lower cost, homegrown, renewable, and environmentally friendly ethanol fuels at their pumps.
Through these incentive programs, Illinois Corn hopes to see more than 500 gas station locations in the state offering higher ethanol blends like E85 and E15 in the near future.