In Wisconsin, ethanol seller hit with a $12m lawsuit for selling cheap ethanol
42 gas stations in Wisconsin are suing Utica Energy LLC and Renew E85 ethanol stations for, get this, selling ethanol too cheaply. The gas stations want $12 M and an injunction stopping Renew E85 from selling any more ethanol. Court records say Renew E85 sold the biofuel below a minimum price set by Wisconsin's Unfair Sales Act. While there are reasons for price controls, the Unfair Sales Act may not be very good.The ethanol stations had been warned about the violations of the Act, but Governor Jim Doyle has told the state not to prosecute. The environmental advantages of ethanol are questionable and they have been given waivers on pollution. Tell us what you think: is the Governor right to go easy on ethanol sellers under a bad law or do gas stations need competitive protection against ethanol stations?
[Source: North Western]
Reader Comments (Page 1 of 1)
Bob H. 10:48PM (2/18/2008)
I applaud Utica for selling E85 at a price even the regular stations could sell it with proper business planning. The local Gas stations have been taking advantage of us for to many years. I did not vote for Doyle but maybe will next time if he keeps using common sense.
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Tim 9:48AM (9/10/2007)
http://en.wikipedia.org/wiki/Dumping_(pricing_policy)
This could be a prelude to driving all other e85 sellers out of business to create a monopoly. A conspiracy theorist would say that they could then drive up the prices to kill the ethanol market in favor of petroleum.
This practice will not drive the market towards more efficient automobiles or serve the consumer’s long-term interests.
Dumping to destroy the competition/enemy and create a monopoly is very good for the monopoly! It’s been around since the dawn of commerce. Just ask China...
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Dave 10:26AM (9/10/2007)
Damn big oil. The attorney fees alone will kill the biofuel movement.
The statute states "Motor vehicle fuel may not be sold at less than cost. For businesses selling motor vehicle fuel at a retail station, cost includes a 9.18% markup over the average posted terminal price. For wholesale transactions, cost includes a presumptive 3% markup."
The simple question is, did the station sell it for below cost??????????
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MarkR 11:52AM (9/10/2007)
The rules are the rules. If you don't like them change them or don't play. While I might agree with the Gov., he still needs to work on changing the rules not ignoring the ones he doesn't like.
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Tim 12:23PM (9/10/2007)
MarkR - Rule by law has been replaced with Rule by man in other words... lawlessness. No wonder people in the US are upset with government.
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paul34 1:42PM (9/10/2007)
price floors? LOL!
I bet they're considering a price cap on gasoline and milk as well? Maybe changing our flag to a sickle and hammer as well?
I'm on the side of the ethanol stations. Why does it matter? If you can't sell it as cheaply, then sorry, you're out of business. That's how it works in a free(ish) market. Just look at Wal-Mart.
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Joe 3:54PM (9/10/2007)
I like how injunctions are used purely to put the little guy under...This is a last resort tactic.
Sad thing is the gas station owners are the unlucky ones, many gas stations are franchised so its not only big oil thats losing, its the guy that has got everything he owns into his gas station..and who has got to get out while the getting is good.
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Jack S. 5:25PM (9/10/2007)
Dumping is related to imported products, not those that are produced domestically. What is suggested in comment 1 is called predatory pricing and to do so requires market power and a high probability of recovering the lost profits after monopoly is achieved. This is VERY difficult to prove and win on. Just read some Supreme Court jurisprudence on the subject to prove it to yourself.
Back to the regular programming. Protecting the dinofuel sellers? You've got to be kidding me. Governor is right regardless of questionable environmental benefits. The policy behind alternative fuels is not 100% environmentally motivated. There's also the goal to get off of foreign fuels.
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Brian 5:32PM (9/10/2007)
we need all the facts. Was the E-85 sold below cost (if not, end of story)? Were the other stations selling E-85 (if not get stop complaining and put them in, also end of story). If they broke prosecute them.
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oobflyer 7:16PM (9/10/2007)
Screw the gasoline stations. They had plenty of time to install a biofuel pump.
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Lascelles Linton 7:23PM (9/10/2007)
Several people asked if it's below cost. I don't think it's a question before the court because it's below cost of civil fines that in question. Even if it is below cost it does not matter. Read the link to link to the FTC page. "Below-cost sales of motor fuel that lead to monopoly are especially unlikely." We are talking about GAS STATIONS here! It's flying off the shelves, no one is going out of business :D
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howard 1:40PM (9/11/2007)
AND I ALWAYS THOUGHT MONOPOLY WAS AGAINST THE LAW (NOT THE GAME)!
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Robert Snyder 2:14PM (9/12/2007)
A general wakeup call is in order! Does anyone really think the supply of oil is endless? Short term profits and political meandering should take a backseat to giving EVERY Alternative fuel full support. If the oil companies complain that is a good thing!! They are not selling as much Fossil fuel.
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Donna 2:46PM (10/29/2007)
These are very scary times, we have to depend on human nature(?) to servive global warming. Greed,and selfeshness come to mind. Not to say all of us are that way, but think about it.
Im not trying to preach gloom and doom,I recycle and try to do as much as I can,and will continue to do so. I woudn't count on our government or big buisnesses to lift a finger higher than they are doing now.
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Kennedy 4:09AM (10/12/2007)
I wish I would have seen this sooner. For both political and environment reasons, both huge in social and environment impact, it's time to find an alternative to gasoline. The oil companies have a total monopoly on what we fuel our cars with because they have been the only thing we fuel our cars with.
It's time to move on. It's not going to be hydrogen; it's going to be ethanol. Did you know you can power a fuel cell with ethanol? Anyway, it's going to take government intervention to break the strong hold that oil companies have over what pumping stations can sell when it comes to liquid fuel. Big oil is not just going to give it up because it's the right thing to do or because it's fair. Anything that comes along to compete with gasoline is going to need help getting a foothold.
Suing an E85 filling station for selling a cheaper alternative is ridiculous in nature but magnificent in scope. Big oil just blinked..........
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Chris M 8:00PM (10/30/2007)
It could be that Utica Energy LLC "Renew 85" has a cheaper source of Ethanol, thus being able to undercut the competition without violating the anti-dumping law. The competitors think that Utica Energy LLC "Renew 85" is selling below cost, even though that might not actually the case.
If Utica Energy LLC can prove their production costs (including profit) are below the sales price, they will win the case.
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