A little-known fact among most South Carolina drivers is that they are currently fueling their cars with ethanol.
It’s only about 10 percent per gallon, but it’s a lucrative financial deal for oil companies. However, in South Carolina those mainly consist of large, out-of-state corporations– rather than the dozens of smaller petroleum companies who deliver the final product to stations.
It’s an issue among the distributors because of the tax credits involved. The federal government offers 4.5 cents per gallon for companies who mix the fuel, but only the blender gets the credit. Larger corporations that provide the fuel in South Carolina (such as BP and Chevron) don’t sell it to local distributors unblended, which has the South Carolina Petroleum Marketers Associaton crying foul.
The state Legislature took sides in a 2008 law that required petroleum companies to offer the unblended fuel, which the SCPMA claims will help lower fuel prices. However, Rep. Tom Young (R-Aiken) said suppliers got around the law.
There was a loophole in it that allowed the large oil companies to maintain their hold on the ability to blend these types of gases in South Carolina… You can’t buy the unblended gas because the larger companies won’t sell it to you.
Currently, the independent groups that operate the state’s four oil terminals (in Belton, Charleston, North Augusta, and Spartanburg) blend the gas at the terminal, ensuring the larger corporations (which still own the oil at that point) get the subsidies.
Young says he is sponsoring legislation that would allow the smaller companies to mix the blend themselves. He says he hopes it will lower gas prices in South Carolina– if only a little bit.
It creates competition for the blended product. Currently, the big oil companies have a monopoly on the market for the blended product. This would create more competition in the marketplace and, hopefully, lower the cost of some types of gas.
Young says he hopes keeping the subsidies local would also provide more money for South Carolina communities.
The bill’s language was mostly written by the SCPMA, which has drawn criticism from larger companies such as Marathon Oil.
The bill cleared a panel Tuesday and now heads to the House Agriculture Committee next week.