Oil Watchdog

NEWS RELEASE:
March 29, 2007

Contact: Judy Dugan, 310-392-0522 ext. 305, cell: 213-280-0175; Jamie Court, ext. 327, cell: 310-874-9989; Tim Hamilton, 360-495-4941

Letter to Chevron CEO Marks Launch of New Web Site, www.OilWatchdog.org

Santa Monica, CA -- The Foundation for Taxpayer and Consumer Rights (FTCR) today launched its comprehensive new web site and blog, OilWatchdog.org, with a letter to Chevron CEO David O'Reilly requesting that the company remove contract barriers that prevent gasoline dealers from selling renewable motor fuels. As crude oil prices surged this week and gasoline prices continued spiking toward new records, FTCR called Chevron's behavior "two-faced."

(UPDATE, Thursday afternoon: Chevron responds, and FTCR answers back.)

In March 2006, O'Reilly told a Senate hearing, "[O]f our 9,300 [gasoline] stations, 8,900 are independently operated and they are free to deploy E85." FTCR said that in fact, Chevron's contracts with retailers make it impractical, and in most cases impossible, for them to sell alternative and renewable fuels. Thus Chevron's long-touted investment in a large biofuel plant opening April 15 on Galveston Bay will produce a fuel that Chevron actively keeps off the market, said FTCR. (See FTCR's letter here and transcript of the Senate hearing here.)

"OilWatchdog.org is being launched to make sure that this sort of two-faced behavior -- from oil industry greenwashing to cash register politics, gasoline price manipulation and environmental misdeeds -- gets noticed," said FTCR President Jamie Court. "More eyes on the industry will mean less opportunity for misdeeds like the refusal of Chevron and others to allow, much less encourage, renewable fuels."

The web site and blog, with sections covering each of the Big 5 oil companies and the industry overall, also posts investigative reports and "smoking-gun" documents. It invites confidential public tips and comments.

Auto executives who met with President Bush Tuesday to tout biofuels said there are now more than 6 million flex-fuel vehicles in the United States, while the country's 170,000 gas stations have only 2,000 pumps for E85 or biodiesel. As FTCR’s research shows, Chevron and other major oil companies are to blame for this retail scarcity.

The letter to Chevron said:

"Mr. O'Reilly, certainly you are aware that the motor fuel contract and Image Agreement that all independent Chevron dealers must sign contain provisions inserted by your legal department that make it all but impossible for a Chevron dealer to deploy E85 or biodiesel. The same holds true for other oil companies with branded stations."

The letter, also signed by independent oil analyst and gasoline retailer representative Tim Hamilton, cites contract language that requires stations to install costly new underground tanks and separate islands and canopies to sell any alternative fuels. See contract language here.

"Gas station owners would have to spend up to $250,000 to satisfy Chevron's contract requirements, even if they had the space to install new underground tanks, which most do not," said Hamilton. "The company's contract restrictions mean that its recent embrace of renewable fuels is little more than a public relations greenwashing."

FTCR's letter also cited restrictions imposed by Chevron's billing systems, which in practice would require the installation of a separate credit card station for alternative fuels.

The Western States Petroleum Association, which represents the major oil companies and refiners operating in the West, has lobbied against legislation in Washington State that would make it easier for retailers to dispense renewable motor fuels, said FTCR. Otherwise, said the letter, "Chevron's … statements in support of alternative fuels are a sham." See digest of proposed legislation and visual examples of space and advertising restrictions here.

"If O'Reilly wants Chevron to have a shred of environmental credibility, he must disavow his trade group’s lobbying in Washington State, and immediately revise Chevron’s dealer contracts," said Judy Dugan, research director of FTCR.

The letter describes practical options:

"Numerous options would allow alternative fuel(s) to be offered by many independent Chevron dealers. One would be to substitute biodiesel for the current diesel. Another would be to substitute an alternative fuel for Chevron midgrade, the lowest-selling grade.

"Independent dealers could also install a blending system that would blend regular and supreme to create the midgrade gasoline. This would free the underground storage tank and dispenser hose currently supplying the midgrade product for either biodiesel or E85."

Oil companies are making much of their biofuel investments and self-serving donations to academic research, while preventing widespread use of the one thing that would most quickly reduce dependence on petroleum -- renewable fuels -- said FTCR. The group noted that even BP’s much-publicized new "green" gas station in Los Angeles, Helios House, sells nothing but conventional gasoline.

"If Chevron and other oil companies meant what they're belatedly saying about renewable energy, they would be offering incentives to gasoline dealers willing to sell E85 and biodiesel," said Dugan. "Instead, Big Oil is using its dealer contracts to ensure that renewable fuels won’t ever cut into its market for petroleum fuels."

FTCR is California's leading public interest watchdog. For more information, visit our new web site, OilWatchdog.org, and FTCR's home web site, ConsumerWatchdog.org

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