The Wall Street Journal: The Ethanol Enforcers

October 8, 2013

October 7 – In its zeal to impose the ethanol boondoggle, Congress has mandated it, subsidized it, and protected it from competitors. Now some Senators are siccing prosecutors on those who still won't get on their ethanol cornwagon.

That's the gist of a recent letter from Iowa Republican Charles Grassley and Minnesota Democrat Amy Klobuchar, demanding the Justice Department and Federal Trade Commission investigate the oil industry for “anticompetitive practices aimed at blocking market access for renewable fuels.” That's Senatorial Cornspeak for saying oil companies should have to put their gas stations in the service of Big Ethanol.

Congress's 2007 Renewable Fuels Standard mandates the blend of 36 billion gallons of renewable fuels (ethanol) annually into the nation's gasoline supply by 2022. But gasoline consumption remains flat. Refiners are thus crashing against the 10% “blend wall”; beyond that concentration in gasoline, ethanol begins to damage motors.

So now ethanol's promoters are scrambling for new outlets, pushing for more pumps that supply straight 85% ethanol, or “E85.” Problem is, few retailers want to sell it. Installing E85 equipment is costly, while “flex-fuel” cars that can use E85 account for less than 3% of the U.S. fleet.

Faced with market reality, the ethanol squad has now seized on the case of a lone Kansas Phillips 66 PSX -0.12% franchisee who sells E85 ethanol. The franchisee also began selling E15 (gasoline with 15% ethanol), which reduced the amount of Phillips 66's own gasoline on offer (and exposed Phillips 66 to liability for any E15 damage to engines).