Farm fields landscape

The Oil Industry's Campaign to Discredit Ethanol

From Open Fuel Standard

In an article in Business Week, immediately before the 2008 recession, David Kiley explained what oil companies were doing to keep ethanol out of our gas tanks. They had quite an effective campaign going. And it did its job — the most common response I have heard from people when I talk to them about the Open Fuel Standard is their fear of ethanol. It will cause food shortages or high food prices. It will ruin Amazon rain forests. It's bad for your car engine. None of these things are true, but the oil industry's campaign left a residue in the minds of many people.

Mark Cooper, the director of research at the Consumer Federation of America says the oil industry "reacted aggressively against the expansion of ethanol production, suggesting that it perceives the growth of biofuels as an independent, competitive threat to its power in refining and gasoline marketing."

Here are some of the things the oil industry did to discredit ethanol:

1. They created an "anti-ethanol information campaign," says David Kiley. Oil companies commissioned a study by Global Insight, a research firm — a study suggesting that an increase in biofuel production will raise food prices. This study was jumped on and promoted by other organizations that are against ethanol, like the poultry, beef, and dairy lobbies. It will not raise food prices (see Reference 1).

2. A professor at UC Berkeley, Tad Patzek wrote a paper in 2005 stating that it takes more energy to make ethanol than you get by burning it. Patzek is a former Shell petroleum engineer and a co-founder of the UC Oil Consortium, which is funded by Chevron, Mobil, Shell, and BP, among others. There are "several flaws in the study" said Michael Wang, a fuel-systems analyst at the Energy Department's Argonne National Laboratory. The study uses old data and it greatly overestimates the energy use of corn farms, skewing the data and giving the oil companies the conclusion they wanted. It is a false accusation (see Reference 2).

3. UC Davis received a $25 million grant from Chevron to study biofuels. They then came out with a paper saying that ethanol only produces the same amount of energy as it takes to make it, and that its lower pollution would be offset by the loss of rainforests to grow crops for ethanol. This is false, as you can read about in Reference 3.

4. Oil companies make it difficult for gas stations to put in ethanol pumps. There are very few ethanol pumps in America, and almost none of them are owned by oil companies. If a gas station owner wants to put in an ethanol pump, the owner will have to jump through lots of hoops to do it, as well as paying $200,000 for the installation. Exxon and Mobil make gas station owners build a separate island as far away as possible from their signs.

Car companies are angered by the tactics of the oil companies. They want to produce more flex fuel cars, but they are waiting for more fuel stations serving alternative fuels. Loren Beard, a senior manager at Chrysler said, "Big Oil is at the top of the list for blocking the spread of ethanol acceptance by consumers..." 


Business Week
3. ditto, # 11

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