Not Logged In Log In   Sign Up   Points Leaders
Follow Us    5:31 PM

Message Forum - Read Message

Category: All Things Ethanol > Topics Add to favorite topics   Post new topicPost New Topic
Author Topic: Iowa Takes Aggressive Step to Tear Down Big Oil’s Bogus Blend Wall Back to Topics
tropicalmn

Veteran Author
Minnesota

Posts:276
Points:254,120
Joined:Mar 2011
Message Posted: May 30, 2013 12:45:47 AM

The legislation protects retailers from Big Oil efforts to restrict competition by guaranteeing local retailers the right to offer the ethanol and biodiesel blends of their choice, such as E15, E85 and B20.
REPLIES (newest first) Post a Reply
Profile Pic
gamechanger2011
Champion Author Wichita

Posts:1,894
Points:72,590
Joined:Jun 2011
Message Posted: May 31, 2013 10:21:04 AM

Yep! The ethanol plant that we were buying from closed down production because of the drought, so we are forced to buy from the rack, which in essence is still the oil companies. The price of E85 has been going up with gas prices. Pricing is too high right now. No surprise here either.

Good news is if the drought is over then plants will be reopening!

[Edited by: gamechanger2011 at 5/31/2013 10:22:20 AM EST]
Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,269
Points:1,326,605
Joined:Apr 2011
Message Posted: May 31, 2013 9:40:32 AM

gamechanger2011, This does not surprise me one bit.
Profile Pic
gamechanger2011
Champion Author Wichita

Posts:1,894
Points:72,590
Joined:Jun 2011
Message Posted: May 31, 2013 9:34:40 AM

krzysik ck....Most supply agreements will let you sell E85 as long as you sell their unleaded and premium. To sell E85 under a supply agreement you would need 3 underground tanks. The problem that Scott Zaremba was that he bought a station with only 2 underground tanks. He eliminated premium so that he could use that tank for E85. We always make sure that a store has 3 underground tanks.

E85 is about as far as they will let you take it. You have to buy the E85 under the supply agreement. That means that the oil companies are controlling the pricing. The only way to offer E85 at a good price is to buy directly from the ethanol plants. The oil companies keep the price of E85 up to make it look less attractive to buyers.

When you start trying to offer other blends of ethanol and install blender pumps....that's when they put the clamp on the dealers. They left Scott alone until he started carrying E15 and was in all the newspapers, as being one of the first in the country to offer it. There was a big deal made on a national level when his stores started offering E15.

I watched this unfold in the sequence that it happened. They will only let you sell E85 id you are buying it from them.
Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,269
Points:1,326,605
Joined:Apr 2011
Message Posted: May 31, 2013 9:21:05 AM

Shell gas station in East Dundee Illinois sells E85 under the branded canopy using the same pumps but the separate hose. It clearly states that this is not Shell product.

Can the big box poly brand exist? Sure it can, at least around here.
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 31, 2013 8:54:57 AM

"As a result, NEW SUPPLY AGREEMENTS will not be allowed to:
Restrict fuels from other suppliers;
Restrict installing a blender pump;
Restrict using current equipment from offering higher blends, like E15, E85, and B20;
Restrict ethanol or biodiesel blends from being advertised;
Restrict the locations where a retailer may offer the higher blends (like under a canopy);
Restrict payment for higher blends to cash only (no credit cards)"

I found nothing in the bill that said this would happen at Branded Sites under contract in current or future contracts due to this one provision of the bill:
2. This section does not apply to any activity that
25 constitutes mislabeling, misbranding, willful adulteration, or
26 other trademark violation by the dealer.

So basically if you accept money and consideration from a brand to sell under that brand then this bill will not abrogate that contract and will not prevent that sort of contract from being signed in the future.

I really did doubt that any state legislative body was going to abrogate current contracts or start dictating provisions of future contracts. That is territory they do not want to explore.
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 5:44:49 PM

Big box retailers = poly brand

Sorry, don't understand this one at all. Are you suggesting Exxon would co brand with a Costco to sell Exxon gas at their sites?
Profile Pic
darwinfinch
Veteran Author Gasbuddy

Posts:457
Points:6,860
Joined:May 2013
Message Posted: May 30, 2013 5:30:46 PM

Big box retailers = poly brand
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 5:26:25 PM

This is a great example of what oil companies will do. We know Scott and as a matter of fact were at one of his stations on I35 last week. Franchise agreement for nation's first E15 retailer in jeopardy
"Zarco 66 has offered E85 at its gas stations for years, RFA said, but it wasn’t until after the company began offering E15 that the oil industry began viewing ethanol as more than a gimmick that could pose a threat to its monopoly on the transportation fuels market. “ConocoPhillips quickly threatened to terminate Zarco 66’s franchise agreement and charge Zarco 66 hundreds of thousands of dollars in penalties unless Zarco 66 started offering ‘premium’ gasoline,” said RFA’s Bob Dinneen, president and CEO, “gasoline that would replace the ethanol housed in one of Zarco 66’s fueling tanks, and a gasoline that is likely to result in far fewer sales than the ethanol blends that would be available if Zarco 66 maintained the current ethanol contents.”
If they have offered e-85 at the stations for years then how is it that Conoco is upset about them now offering e-15? Because they violated a contract they signed with Conoco that said they would sell premium! This is where ethanol supporters see it as blocking the sale of ethanol but in reality the site sells e-10 and e-85 with Conoco's blessing but violated a contractual term to stop offering premium in order to sell E-15. Turn it around, an ethanol distributor signs a contract with a site to provide discounts and cash up front to sell E-10 and e-85 at a station. The site then decides it wants to sell clear gas to it's customers as well but in order to do so they must no longer sell e-85. Would the ethanol distributor look the other way? Or would he seek regress? A contract has been violated and both parties signed it of their own free will. Could big oil roll this case out to say that the RFA is blocking the sale of pure gas?

It's a off the wall example but it's the facts in the case. A contract is a contract and if two parties enter it of their own free will a later violation of the agreement will have consiquinces.
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 5:06:31 PM

Poly branded will not happen. If there is no perceived value to the brand, be it Shell, Chevron, Exxon etc. then they will not be willing to put their name on the site and offer finacial incentives to do so if there are other names on the sign. The biggest push in the market today by far is the big box retailers, and the unbranded chain offerings. In otherwords the big box guys are Costco, Wal Mart, Sams, and the grocery stores. They are gaining market share every day and the gas they are selling is coming from the oil companies. The unbranded chains are Raceway, Sheets, WaWa, and Quick Trip. In a price sensative world brought about by the high fuel costs they are able to compete with lower prices because the big box guys write off fuel margins as advertising costs in order to get you in their stores. While the unbranded chains has massive c-stores and make a lot of profit selling beer, tobacco, drinks and twinkies.

The future holds that if prices stay high they will continue to grow with their offerings. The future of ethanol and ethanol blending needs to focus on these fuel sellers because they are the up and coming group in the industry with lower fuel margin requirements. They are the ones who have the ability to put in any type pumps and blenders they want to because they have no brand constraints. Small victories with branded sites in terms of fuel choice will not win the market over to ethanol. Changes at these sites will further your cause faster than anything. However since their margins are lower they are not incented to spend the money on blender pumps and additional tanks because that's not where they make the money. As long as the branded sites stick around and they can stay 5 to 10 cents cheaper than branded then they will not embrace offering higher ethanol blends.

While the perception is that big oil is trying to block ethanol entry into the market and to some extent they are the bigger concern by far is that they can continue to sell gas to anyone branded or unbranded. Chevron has exited branded stations in 18 states in the past five years and Exxon has exited numerous states as well. They are losing the battle in many areas but the people taking their place are not advocating ethanol. They are content to see fuel as a smaller part of their business and don't really care about ethanol vs gas.

[Edited by: brerrabbitTX at 5/30/2013 5:11:05 PM EST]
Profile Pic
gamechanger2011
Champion Author Wichita

Posts:1,894
Points:72,590
Joined:Jun 2011
Message Posted: May 30, 2013 4:58:15 PM

krsysiek ck...
"I am definitely gaining a better appreciation for unbranded gas stations. It would be nice to have more choices around here."
We know more and more convenience/gas station owners that are wanting to and working to unbrand. I think branded gas stations by the the big oil companies will someday be a thing of the past. People are finding out that they don't need the brand. The big oil companies used to be in the convenience store business also, but decided to get out a few years back.
And darwinfinch....I think that you are exactly right!

[Edited by: gamechanger2011 at 5/30/2013 4:59:05 PM EST]
Profile Pic
darwinfinch
Veteran Author Gasbuddy

Posts:457
Points:6,860
Joined:May 2013
Message Posted: May 30, 2013 4:44:28 PM

I think the trick here is defining the differences between un-branded stations, uni-branded stations, and co-branded (poly-branded) stations. It sounds like stations can already brand or un-brand, each with its own pros and cons, but given that vehicles and their tanks are trending toward blending, we're going to need a structure that embraces poly-branding in the future. To say that a station, if it wants to offer a variety of products, must sacrifice all marketing and such, is again, 19th and 20th century thinking.

The station of the future will not be a McDonald's type store, it will be a food court where you can pull in and choose from multiple brands. Seeing a "Shell" logo on a gas station because they offer that fuel will seem as weird as seeing an "M&Ms" logo because that's one of the candies you can buy inside. Oil companies don't care for this model, while this new legislation nudges in that direction.

For the consumer it's a no brainer. It will lower cost and provide options. The "we only serve Pepsi products" model is old fashioned (in my opinion).
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 4:31:46 PM

Sorry I forgot that there is one additional benifit to the law which is it will allow the buyers of the fuel (really the trucking companies and jobbers with their own trucks) to create the RIN's. The terminals will no longer be the blender of record. So the question that follows from this is will the jobbers and truckers pass those savings on to the dealers or just keep the money themselves? I know everyone thinks that big oil is the only crooks in the supply chain but in reality everyone in the food chain is looking for additional profits,
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 4:22:06 PM

Okay I finally have a copy of the actual bill and it has apparently passed the House in Iowa and still needs to pass the Senate and be signed by the govenor to become law.

There are advantages and disadvantages to working in the industry I work in but at this point as a result of my employment I have access to the groups we employe that monitor these types of laws.

What the law actually says is that terminals must offer for sale any and all products they have at the terminal to the customers of the terminal. It says:

1. a. A dealer or distributor may blend a conventional
13 blendstock for oxygenate blending, gasoline, or diesel fuel
14 using the appropriate biofuel, or sell unblended or blended
15 gasoline or diesel fuel on any premises in this state.
16 b. Paragraph “a” does not apply to the extent that the use
17 of the premises is restricted by federal, state, or local law.
18 2. A refiner, supplier, terminal operator, or terminal
19 owner who in the ordinary course of business sells or
20 transports a conventional blendstock for oxygenate blending,
21 gasoline unblended or blended with a biofuel, or diesel fuel
22 unblended or blended with a biofuel shall not refuse to sell
23 or transport to a distributor or dealer any conventional
24 blendstock for oxygenate blending, unblended gasoline, or
25 unblended diesel fuel that is at the terminal, based on the
26 distributor’s or dealer’s intent to use the conventional
27 blendstock for oxygenate blending, or blend the gasoline or
28 diesel fuel with a biofuel.
29 3. This section shall not be construed to do any of the
30 following:
31 a. Prohibit a distributor or dealer from purchasing,
32 selling or transporting a conventional blendstock for oxygenate
33 blending, gasoline that has not been blended with a biofuel, or
34 diesel fuel that has not been blended with a biofuel.
35 b. Affect the blender’s license requirements under section
1 452A.6.
2 c. Prohibit a dealer or distributor from leaving a terminal
3 with a conventional blendstock for oxygenate blending, gasoline
4 that has not been blended with a biofuel, or diesel fuel that
5 has not been blended with a biofuel.
6 d. Require a nonrefiner biofuel manufacturer to offer or
7 sell a conventional blendstock for oxygenate blending, gasoline
8 that has not been blended with a biofuel, or diesel fuel that
9 has not been blended with a biofuel.
10 4. A refiner, supplier, terminal operator, or terminal
11 owner who violates this section is subject to a civil penalty
12 of not more than ten thousand dollars per violation. Each day
13 that a violation continues is deemed a separate offense.What this means is that the terminal will be forced to sell sub octane(84.5) gas across the rack without blending the ethanol. That's really all the law does. According to information from some very reliable sources the push for this is based on the fact that the major pipeline supplying gasoline into the state of Iowas is planning to do away with 87 octane clear gas effective September 16 of this year. It is an effort on the part of the dealers to try and force the terminals to continue to supply 87 octane fuel instead of the 84 suboctane.

The law does not force terminals to carry additional products they do not currently have. Further it adds this provision:

2. This section does not apply to any activity that
25 constitutes mislabeling, misbranding, willful adulteration, or
26 other trademark violation by the dealer.

Which means that if in the Branded agreement there is a provision for what the station will offer in terms of products then this law will not change that and future agreements can contain those provisions. So if a dealer wants the cash from the Branded guys they will still be subject to the provisions of current or future agreements they sign.

At the end of the day I was wrong as to what they were actually going for here. What the whole thing boils down to which is actually fairly ironic is the dealers are making a big push to retain their ability to sell clear gasoline that contains no ethanol. As I stated in another post I started 30 to 35% of my business in this area is selling clear 87 product.

Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,269
Points:1,326,605
Joined:Apr 2011
Message Posted: May 30, 2013 3:38:54 PM

gamechanger2011 wrote: "I think that this will pretty much guarantee that anyone that wants to sell ethanol blends will not be Branding their locations. The oil companies will never agree to this! No loss there though. Being unbranded has worked fine for us!"

I am definitely gaining a better appreciation for unbranded gas stations. It would be nice to have more choices around here.
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 3:32:04 PM

I think you guys are misunderstanding the concept I am trying to explain. In the gas world there are two major categories of gas sold, Branded and Unbranded. Branded has the individual companies additive package and is delivered to a Branded station that goes by Chevron, Conoco, Shell etc. The agreements between the sellers (the oil companies) and the buyers (the retail sites) have contractual obligations concerning the amount of money given to the dealer, the term of the agreement etc. that I have explained previously.

Unbranded sales work in the same manner with the notable exceptions being that the seller (oil companies) put absolutely no restrictions whatsoever on the buyer (retail sites) They can contract to buy any product in any amount the want to. The gas has a generic additive that meets EPA regulations and that's the end of the story. The company I work for has refineries in the US across the country and right now we sell about 60% of our refined product branded and 40% of our products unbranded. We will sell to anyone who wants to buy from us and meets any businesses standards, credit etc. We will sell on a contract basis or a rack basis which means on a given day a buyer shows up at the terminal and because we are the lowest posted price they buy from us today but tomorrow someone else is the lowest posted price they buy from them.

In reference to the McDonalds comparison what is meant is that you buy hamburger meat from McDonalds and if you serve it at a McDonalds franchise then it's a Big Mac. But if you buy meat from me that is not destined for a franchised McDonal's then you can sell it any way you want and call it anything you want.

In my years in this industry I have never once seen or heard of an unbranded sale of product that came with a single restriction from the seller as to how the retailer sold the product. E-85 sure go ahead. Put it in a tank to blend up any variation you want from E-10 to E-85 and everything in between, sure go ahead.

What you describe is not the way the system works and gamecahnger even admits numerous times that he went unbranded so they could do the things they wanted to do concerning their fuel offerings.
Profile Pic
gamechanger2011
Champion Author Wichita

Posts:1,894
Points:72,590
Joined:Jun 2011
Message Posted: May 30, 2013 1:00:59 PM

"As a result, NEW SUPPLY AGREEMENTS will not be allowed to:
Restrict fuels from other suppliers;
Restrict installing a blender pump;
Restrict using current equipment from offering higher blends, like E15, E85, and B20;
Restrict ethanol or biodiesel blends from being advertised;
Restrict the locations where a retailer may offer the higher blends (like under a canopy);
Restrict payment for higher blends to cash only (no credit cards)"
I think that this will pretty much guarantee that anyone that wants to sell ethanol blends will not be Branding their locations. The oil companies will never agree to this! No loss there though. Being unbranded has worked fine for us!

[Edited by: gamechanger2011 at 5/30/2013 1:01:33 PM EST]
Profile Pic
gamechanger2011
Champion Author Wichita

Posts:1,894
Points:72,590
Joined:Jun 2011
Message Posted: May 30, 2013 12:56:11 PM

This is a great example of what oil companies will do. We know Scott and as a matter of fact were at one of his stations on I35 last week. Franchise agreement for nation's first E15 retailer in jeopardy
"Zarco 66 has offered E85 at its gas stations for years, RFA said, but it wasn’t until after the company began offering E15 that the oil industry began viewing ethanol as more than a gimmick that could pose a threat to its monopoly on the transportation fuels market. “ConocoPhillips quickly threatened to terminate Zarco 66’s franchise agreement and charge Zarco 66 hundreds of thousands of dollars in penalties unless Zarco 66 started offering ‘premium’ gasoline,” said RFA’s Bob Dinneen, president and CEO, “gasoline that would replace the ethanol housed in one of Zarco 66’s fueling tanks, and a gasoline that is likely to result in far fewer sales than the ethanol blends that would be available if Zarco 66 maintained the current ethanol contents.”

[Edited by: gamechanger2011 at 5/30/2013 12:56:59 PM EST]
Profile Pic
Hannie59
All-Star Author Appleton

Posts:964
Points:24,300
Joined:Apr 2010
Message Posted: May 30, 2013 12:42:06 PM

right darwin, but what brer is condoning would be that McDonalds owns all rights to the hamburger itself, and no restaurant that sells that can offer anything else but hamburgers. Chicken is banned! Fish is banned! Nobody that sells hamburgers can ever sell chicken, so in effect all alternatives to the hamburger are unable to be soild.

Thats what currently is being done by the oil industry, and that's why Iowa is finally doing the right thing. SD too I guess although I wasn't aware of that one :)

The seller damn well should have the right to sell BP gas and ethanol from the plant down the road too. If BP doesn't like it, then don't offer these types of contracts in IOWA. And the consumer should also know that all gas makeup is different. If I buy BP gas in Green Bay and Fred buys it at the same time in Tampa Bay, the consistency of the product is terrible. These two are buying two vastly different products anyway. Branding of gasoline in reality, has no merit! It's a smokescreen.


[Edited by: Hannie59 at 5/30/2013 12:47:16 PM EST]
Profile Pic
darwinfinch
Veteran Author Gasbuddy

Posts:457
Points:6,860
Joined:May 2013
Message Posted: May 30, 2013 12:22:55 PM

RE: "if you sign a branded agreement with Shell, Exxon, Chevron, Conoco, etc then you are signing a contract that is not unlike a franchise agreement with McDonalds"

True... both are peddlers of unhealthy products we cannot resist, despite the alternatives.

And I would even say that it's fair for McDonald's to put whatever they want in their franchise agreements. If they don't want individual stores to sell Whoppers, that makes sense. If they only want to sell Coke products in their stores... cool. Then again, I don't think McDonald's gets $7BILLION in tax breaks every year and government support on every level with infrastructure/investment.

What would we say if a subsidized railroad corporation refused to haul cars containing ethanol, simply as a matter of business? In the U.S. the railway system is privately owned and managed but they are heavily integrated and we still have regulations which state that "common carriers have a duty to carry all commodities".
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 12:00:19 PM

In regard to the liability issue effective September 16 of this year the entire states of Iowa, Nebraska, Kansas, South Dakota, and parts of Missouri will convert to a sub octane blendstock for gasoline. It will be a 84.4 octane fuel and per federal and state regulations it is not considered a road ready fuel. Todays laws state that the product cannot leave a terminal without first being blended with ethanol to make it an 87 octane fuel. The new legislation in Iowa will require terminals to allow that fuel to be loaded and taken to retail sites. In so doing it is assumed that the fuel will be blende with ethanol at varying levels to make different blends. If however taht fuel is put into a vehicle without any form of blending then the seller of record at the terminal will not be responsible for any liabilities resulting from the use of that fuel.

Albeit today that fuel is not suppose to get out per regulation it sometimes does and when it does the seller at the terminal is liable. Under the new Iowa rules the retail site will be the only liable party.
Profile Pic
tropicalmn
Veteran Author Minnesota

Posts:276
Points:254,120
Joined:Mar 2011
Message Posted: May 30, 2013 11:56:42 AM

As a result, NEW SUPPLY AGREEMENTS will not be allowed to:
Restrict fuels from other suppliers;
Restrict installing a blender pump;
Restrict using current equipment from offering higher blends, like E15, E85, and B20;
Restrict ethanol or biodiesel blends from being advertised;
Restrict the locations where a retailer may offer the higher blends (like under a canopy);
Restrict payment for higher blends to cash only (no credit cards)

As in South Dakota it appears the Iowa bill might? only apply to new supply agreements signed after the bill is approved.



[Edited by: tropicalmn at 5/30/2013 11:58:11 AM EST]
Profile Pic
darwinfinch
Veteran Author Gasbuddy

Posts:457
Points:6,860
Joined:May 2013
Message Posted: May 30, 2013 11:50:39 AM

In fact, it's actually really cool that Iowa is leading this in 2013, because they were on the front lines in 1933, experimenting with ethanol as a renewable alternative to the lead additives Big Oil was defending (and continued to defend all the way up to 1980). Perhaps biorefiners didn't see what they were up against then, because they lost... the corporate tactics worked, leaded fuel thrived, and ethanol went into a dark age. Now it's back, and moving forward, and Iowa has the foresight to make a few regulatory chess moves that could prevent a historical repeat. I say NICE WORK IOWA!
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 11:48:28 AM

"I disagree. We are dealing with outright bullies here. It is more than warranted to create legislation that ensures a level playing field and ensures benefits to the general citizenry. So to create a legal guideline to require a contract to be fair is wrong???? No, sir it isn't. The status quo imposed by oil is wrong. If branded gas sellers lose this unjust control they have, that's all RIGHT. They can find another way to market than to force total control upon the seller."

If you want to buy unbranded fuel from the oil companies they will sell you all you want and you can run your station anyway you want and blend whatever you want. Unbranded fuel sales come with 0 obligations from the seller because he is selling you a commodity period end of sentence. No legislation, needed to let the retailer do whatever he wants to do.

Now if you sign a branded agreement with Shell, Exxon, Chevron, Conoco, etc then you are signing a contract that is not unlike a franchise agreement with McDonalds. Have you ever seen whats in one of those? It says what you can sell, who you have to buy products from etc. It is very onirous and has been held up in the courts. Your signing with a Brand gets you things, National advertising and marketing, access to rewards programs for your customers, Tier 1 additive, credit card clearing services for slightly better fees etc. Now you or anyone else can say that all that is worth nothing but within the industry there are tose that value those things so the thought is you are getting something for signing the Branded deal.

So what you are saying is that it takes legislatures to level the playing field in the fuel industry but its not needed for any other franchise offering out there?

That does not make sense. Retailers have a choice, don't brand with a major and run your business the way you want to, but if you want any of the advantages they offer then you are making a commercial decison to do so. Nothing illeagal about that.



[Edited by: brerrabbitTX at 5/30/2013 11:50:12 AM EST]
Profile Pic
darwinfinch
Veteran Author Gasbuddy

Posts:457
Points:6,860
Joined:May 2013
Message Posted: May 30, 2013 11:37:48 AM

In the 1930s, as alcohol began to appear as an alternative to the lead additives in fuel (which were very profitable), oil companies were able to maintain their dominance and quell an ethanol revolution simply by puppeteering individual stations into hiding and obscuring the alternative. From what I've read, it was a really intense period of bullying by Big Oil to maintain the status quo by holding stations hostage through binding agreements, caveats, and choice limitations... the very kinds of manipulation this new bill protects against.

TIMELINE 1933 – Farmers advocate mandatory or tax-encouraged use of ethyl alcohol as fuel anti-knock instead of Ethyl leaded gasoline. Iowa State University and several Midwestern companies begin experimenting with and selling 10 percent ethyl alcohol in gasoline as anti-knock fuel. American Petroleum Institute urges oil industry to fight back vigorously. Ethyl Corp. denies license to sell Ethyl to wholesalers using ethyl alcohol blended gasolines, selling cheaper than majors or violating ”business ethics” as defined by Ethyl and Standard, according to F.B.I. report.

Source:
66.147.244.135/~enviror4/about/ethyl-leaded-gasoline/lead-history-timeline/
Profile Pic
tropicalmn
Veteran Author Minnesota

Posts:276
Points:254,120
Joined:Mar 2011
Message Posted: May 30, 2013 11:26:35 AM

brerrabbitTX says"The bill also releases the sellers at the terminals from any liabilities associated with the blends individual site choose to sell. In otherwords prior to this bill if a dealer sold you bad gas or incorrect blends that did damage to your vehicle the terminal seller could be held liable."
The bill doesn't offer to relieve liability from bad gas or incorrect blends.As example it relieves liability if fuel correctly blended as E15(ASTM international
specifications) is sold at pump correctly labeled as E15 & used in a vehicle which isn't approved for E15 by the auto manufacturer.
House File 640

NEW SUBSECTION. 1A. A manufacturer of an engine, or the
manufacturer of a motor vehicle which includes an engine, is
not liable for damages caused to the engine or motor vehicle by
the use of incompatible motor fuel.
Sec. 4. Section 214A.20, subsection 2, Code 2013, is amended
to read as follows:
2. For purposes of this section, a motor fuel is
incompatible with a an engine or motor vehicle according to the
manufacturer of the engine or motor vehicle.
LIABILITY PROTECTION. In 2011, the general assembly enacted
SF 531, which provided that a retail dealer is not liable
for damages caused by the use of incompatible motor fuel
dispensed at the retail dealer's motor fuel site under certain
conditions. The incompatible motor fuel must comply with the
specifications for that type of motor fuel (ASTM international
specifications), it must be selected by a person other than
the retail dealer, and it must be dispensed from a motor fuel
pump that correctly labels the type of fuel dispensed (Code
section 214A.20). The bill extends such protection against
liability to other marketers, pipeline companies, refiners,
a manufacturer of an engine or the manufacturer of a motor
vehicle is not liable for damages caused to the engine or motor
vehicle by the use of incompatible motor fuel.


[Edited by: tropicalmn at 5/30/2013 11:34:49 AM EST]
Profile Pic
Hannie59
All-Star Author Appleton

Posts:964
Points:24,300
Joined:Apr 2010
Message Posted: May 30, 2013 11:21:04 AM

brerrabbitTX said: " So in that regard there is absolutely no reason to pass a bill that says in future contract negotiations this is the way it has to be."

I disagree. We are dealing with outright bullies here. It is more than warranted to create legislation that ensures a level playing field and ensures benefits to the general citizenry. So to create a legal guideline to require a contract to be fair is wrong???? No, sir it isn't. The status quo imposed by oil is wrong. If branded gas sellers lose this unjust control they have, that's all RIGHT. They can find another way to market than to force total control upon the seller.



[Edited by: Hannie59 at 5/30/2013 11:22:20 AM EST]
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 11:17:01 AM

Yes it is for imaging and brand which can and does include improvements to the site. I am not arguing the point, merely stating it. But in return for this money the dealer signs a contract as to what products will be offered. You are a perfect example of what can happen. When your contract was up (I am assuming yours had expired) you made the choice to not resign with the brand and chose to operate Unbranded. That was your choice when you were or were not negotiating the contract. The entire point of my response was to say good bad or indifferent a contract is a contract and if this legislation abrogates current contracts then I think it is and sets a bad precident. Forget this is a good thing for ethanol or a bad thing for oil. Take it completely out of that context and simply put I do not like any situation where legislators pass bills that effectively nullify exsisting commercial agreements that were freely entered into by two commercial parties.

It's just not right!
Profile Pic
Hannie59
All-Star Author Appleton

Posts:964
Points:24,300
Joined:Apr 2010
Message Posted: May 30, 2013 11:12:51 AM

brerrabbitTX said: "The irony of this bill (which I just received an internal e-mail about coincidentally) is that it will also require sellers of motor fuel in Iowa to supply types of gas that are not currently offered at terminals in Iowa and therefore increase costs."

Ummmmmm... sounds like your internal memo is a scare tactic. Very typical.

If your claim is true, that referred to provision should be removed. Lets get to the fine print and revise. The bill looks to be 90% good anyway

However if the article gamechanger links is true, then it's great all around.
Profile Pic
gamechanger2011
Champion Author Wichita

Posts:1,894
Points:72,590
Joined:Jun 2011
Message Posted: May 30, 2013 11:02:59 AM

"This money can be anywhere from $30,000 up to $100,000 per site they sign up"
This money is for imaging and to promote the Brand. It's not just free money. It allows the oil companies to basically control many aspects of your stores. Plus you pay around 8 cents more a gallon for branded gas which you are obligated to purchase.

[Edited by: gamechanger2011 at 5/30/2013 11:07:45 AM EST]
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 10:44:27 AM

As a wholesaler, jobber, or individual dealer you have the right to negotiate any deal you want in a new contract. Don't like what's being offered, don't sign the deal. No one is holding a gun to anyone's head to force them to sign a contract that does not allow for the sale of higher ethanol blends. So in that regard there is absolutely no reason to pass a bill that says in future contract negotiations this is the way it has to be. If that is the case then by default one can assume that the bill is in regard to current agreements.

The irony of this bill (which I just received an internal e-mail about coincidentally) is that it will also require sellers of motor fuel in Iowa to supply types of gas that are not currently offered at terminals in Iowa and therefore increase costs.

The bill also releases the sellers at the terminals from any liabilities associated with the blends individual site choose to sell. In otherwords prior to this bill if a dealer sold you bad gas or incorrect blends that did damage to your vehicle the terminal seller could be held liable. With the bill which allows retail sites to sell whatever conction they can come up with it releases the sellers at the terminal from liability by law. That alone could be a big win for the terminal sellers including the oil companies.
Profile Pic
Hannie59
All-Star Author Appleton

Posts:964
Points:24,300
Joined:Apr 2010
Message Posted: May 30, 2013 10:29:21 AM

brer, look at the BIG picture. IS this a requirement for future supply contracts or is it a voiding of existing?

If it is a voiding of existing contracts by the state that would be a stretch. But if this is a new legal guidline that must be applied to contracts of this nature going forward, that's different. And it's good. The way it's done now, is wrong.

Whatever gamechanger's state is, had this been a law gamechanger and their customers would benefit. Gamechanger would have had more options how to operate. Customers better chance at choice. Just sayin....

[Edited by: Hannie59 at 5/30/2013 10:34:35 AM EST]
Profile Pic
darwinfinch
Veteran Author Gasbuddy

Posts:457
Points:6,860
Joined:May 2013
Message Posted: May 30, 2013 10:24:49 AM

For as much crap as Iowa takes for being redneck dummies, they sure do a lot of smart things. :)
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 30, 2013 10:21:32 AM

Okay Hannie, you want to hear a response from someone who you believe is on the oil side of things so here it is. Hooray! Iowa just passed a law that gives retailers the right to abrogate contracts.

Look I am not against choice, I like choice, you like choice. But here is the rub, Branded Retail sites sign agreements (contracts) with suppliers (oil companies) that usually have from 7 to 10 year terms. Basically it says that the retailer will buy from the supplier for the entire term and in exchange for that the supplier gives the retailer money up front. This money can be anywhere from $30,000 up to $100,000 per site they sign up. The money is basically forgiven at some rate over the term of the agreement. In addition most deals also call for discounts on the price of fuels over the first three to four years of the contract on a cents per gallon basis. The terms of the agreement are somewhat negotiable but generally this is how they work.

Now you can certainly say that the suppliers (big oil) is limiting choice on the dealers part because it specifies certain things like what the fuel offering will be. However understand that almost all of these agreements allow for the retailer to offer fuels not in the agreement if they sell it from under a seperate canopy away from the other pumps that are under the branded canopy. But consider this, the retailer gets up front money, he benifits from the deal because he can make capital improvements to his site. He gets a price discount for three to four years. So essentially what this bill does is to abrogate those contracts. And in so doing there will be a question of law because while the bill says retailers can do what they want embedded in the contract is recapture language that says if the retailer wants to get out of the deal he can, but he will have to repay what he was given up front that has not been worked off. So if his upfront payment was say $2 million and he was half way through the term he would owe $1 million back to the supplier.

Now question the deals all you want, but this is and has been the standard operating proceedure in the industry. It is no different than when you sign up for cellular service. Want a free phone, or a deeply discounted one? Sign a two year contract and you can have one. Try to leave early and you will pay fees based on lost revenues and the unaccrued cost of the phone. This bill while offering choice is also basically making all contracts between retailers and suppliers in the state of Iowa null and void. Yes victory for ethanol, but take it out of the fuel discussion and insert it into any other contractual situation and is that a world you want to live in? Bank decides you are not that great a credit risk anymore and evicts you from your home and forecloses because home values in your area have skyrocketed. That's illegal, but wait, the state of Iowa passed a law saying banks can do that which rendered your agreement with the bank null and void so yes they can do it. Yes it sounds a somewhat unreal example but if you have no issue with the state voiding fuels contracts than it would follow you have no problem with them voiding any contract where you don't like what the contract represents.
Profile Pic
SilverStreaker
Champion Author Twin Cities

Posts:14,117
Points:2,791,495
Joined:Mar 2006
Message Posted: May 30, 2013 9:53:51 AM

Hopefully, this trend will spread north!
Profile Pic
Hannie59
All-Star Author Appleton

Posts:964
Points:24,300
Joined:Apr 2010
Message Posted: May 30, 2013 8:26:55 AM

tropical, gamechanger... can you anticipate the responses you're gonna get from the clueless here? Wow man. I can. Permit me to emphasize the main point here prior to the false statements that are bound to appear above this one.

This gives the retailer the right to offer whatever blended fuels they want. It does NOT require the retailer to install a blender, sell E-85, E-15, or B-20. It does NOT require anyone to buy anything in particular. It takes away the dictatorial power of the oil company and puts it in the seller's hands. Which is flat out the right thing to do. Any opposition to this legislation could only come from oil. And I can't wait to hear how THEY spin this in a newspaper ad or some such. Just watch folks who read here from Iowa. Just watch what oil resorts to as they try to distort what this bill actually IS. You will see spin upon spin upon lie.

All it does is give the retailer more decision power what to sell. . And that, friends, is what it's all about. Iowa, good work.


[Edited by: Hannie59 at 5/30/2013 8:29:52 AM EST]
Profile Pic
gamechanger2011
Champion Author Wichita

Posts:1,894
Points:72,590
Joined:Jun 2011
Message Posted: May 30, 2013 7:28:55 AM

This is great news! I hope that other states will follow suit. We had to unbrand to get this done.
Profile Pic
Hannie59
All-Star Author Appleton

Posts:964
Points:24,300
Joined:Apr 2010
Message Posted: May 30, 2013 7:11:33 AM

This step is very pro-consumer, and facilitates consumer choice :)
Profile Pic
goldseeker
Champion Author West Virginia

Posts:22,983
Points:3,318,335
Joined:Sep 2005
Message Posted: May 30, 2013 3:33:55 AM

It will be a long battle, but it needs to be done.
Profile Pic
WhiskeyBurner
Veteran Author Illinois

Posts:450
Points:15,855
Joined:May 2013
Message Posted: May 30, 2013 1:33:38 AM

Hope they can get it through.
Post a reply Back to Topics