Letter to Mr. David J. O'Reilly, Chairman and Chief Executive Officer, Chevron Corporation

Letter

May 3, 2007

Mr. David J. O'Reilly
Chairman and Chief Executive Officer
Chevron Corporation
6001 Bollinger Canyon Road
San Ramon, CA 94583

Dear Mr. O'Reilly,

For many years, I've been supporting and promoting ethanol and biodiesel fuels as a way to reduce our dependence on foreign and traditional energy sources, and increase our national security and rural economies. Our nation is now consuming five billion gallons of ethanol annually, and is estimated to produce as much as eleven billion gallons annually by 2009.

In an effort to further reduce America's oil dependence, it's imperative that higher ethanol blends be available to consumers. While our domestic auto manufacturers are leading the effort to expand the flex-fuel vehicle market, more must be done to expand the fuel's availability. Of the 170,000 stations nationwide, only 1,100 currently offer E-85. This represents less than one percent of fuel stations.

As you may recall, on March 14, 2006, you testified under oath before the Senate Judiciary Committee. At the hearing, I asked if you would commit to allow independent owners of branded stations to sell E-85 or B-20, and if you would allow those station owners to purchase the alternative fuel from any outlet. For your benefit, I've enclosed a copy of the hearing transcript.

In your response to me, you stated that Chevron was already allowing station owners to sell E-85, and that it was available and under the canopy. Your testimony before the committee clearly stated that Chevron was perfectly willing to allow the sale of alternative fuels at Chevron stations. You proudly stated that Chevron is one of the largest sellers of ethanol. However, a recent Wall Street Journal article, which I've enclosed, detailed many of the obstacles your company and other major integrated oil companies apparently use to effectively prohibit or strongly discourage the sale of alternative fuels.

In fact, Chevron's agreement with franchisees discourages selling E-85 under the main canopy and includes policies that are claimed to prevent franchisees from deceiving customers as to the source of the product. The Wall Street Journal article indicated that Chevron recommends that E-85 pumps be outside the canopy, and that Chevron prohibits branded stations from including E-85 on signs listing fuel prices. It seems these policies are in place simply to limit the availability and sale of alternative fuels, rather than prevent customer deception.

I would appreciate hearing your explanation as to why you led me, the Judiciary Committee and the American people to believe that Chevron supports making E-85 available to your customers, yet your company is described by the Wall Street Journal as a key obstacle to expanding the availability of alternative fuels. I would appreciate knowing exactly what Chevron is doing to grow the E-85 market, and why you believe your tactics aren't simply obstacles, as claimed by the Wall Street Journal.

I look forward to receiving your response not later than May 25, 2007.

Sincerely,

Charles E. Grassley
United States Senator

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