At the end of last month, the Consumer Federation of America came out with a report that basically says oil companies are holding up the expansion of ethanol.
However, “Big Oil vs Ethanol” has received virtually no press coverage. Interesting. CFA is an advocacy, research, education, and service organization that has been around since 1968 and is credible enough that the media has been known to use its opinions on other matters – but not in this case.
The conclusion of the CFA report written by Mark Cooper, CFA’s director of research, reads:
Big Oil has reacted aggressively against the expansion of ethanol production, suggesting that it perceives the growth of biofuels as an independent, competitive threat to its market power in refining and gasoline marketing. This paper explored the market fundamentals that underlay Big Oil’s reaction to policies to expand ethanol production. We find that, at the critical margins of spare capacity, the expansion of ethanol capacity could pose a real threat to the tight market situation that Big Oil has created by steadily underinvesting in refining capacity. The vigorously competitive ethanol sector is set to undergo a dramatic expansion, which could alter the extremely tight supply-demand balance that has afflicted gasoline consumers for the past seven years. While there are many other aspects of the expansion of ethanol that deserve close attention – such as non-food feed stocks and land management issues – on the market structural potential for ethanol to be a game changer,
consumers have a large stake in the outcome of the war being waged by Big Oil against ethanol. Supporting increased competition in the automobile fuels market will help discipline a market dominated by a handful of multinational oil companies that are extracting monopoly profits from US gasoline consumers.
Is the media as threatened by ethanol as Big Oil seems to be?