U.S. ethanol group wants origin labeling for oil

NEW YORK Tue Sep 1, 2009 12:57pm EDT

An employee fills a car with petrol at a gas station in Jammu July 1, 2009. REUTERS/Mukesh Gupta

An employee fills a car with petrol at a gas station in Jammu July 1, 2009.

Credit: Reuters/Mukesh Gupta

NEW YORK (Reuters) - A U.S. ethanol industry group is pushing lawmakers to craft legislation requiring fuel companies to inform customers what country their fuel came from in hopes of increasing awareness about money spent on oil imported from overseas.

"Most Americans don't want their paychecks going to Venezuela and other regimes that don't agree with and support the U.S," said retired U.S. Army General Wesley Clark, who co-chairs Growth Energy, the industry group behind the push.

Clark said Growth had spoken with lawmakers such as Collin Peterson, the chairman of the House Agriculture Committee and Tom Harkin, chairman of the Senate Agriculture Committee, and others from fuel-producing states, urging them to craft legislation that would require such labeling.

The United States spends tens of billions of dollars a year on protecting shipping lanes for oil, said Clark.

Some of the money could be saved by increasing production of U.S. oil and developing alternative fuels like ethanol and fuel-sipping cars, he added.

U.S. oil production peaked in the 1970s which means the world's largest fuel consumer has to import most of its crude.

In 2008, Canada was the largest exporter of oil to the United States, sending nearly 2.5 million barrels per day, according to the U.S. Energy Information Administration. Saudi Arabia sent more than 1.5 million bpd, Mexico sent 1.3 million bpd, and Venezuela sent nearly 1.2 million bpd, according to the EIA.

Clark stopped short of saying the labeling would cut U.S. consumption of oil from countries whose governments are not friendly to Washington. But he said it would give consumers more choice on deciding what kind of fuel, or alternative fuel automobiles, they want to buy.

U.S. ethanol producers, pushing to boost the allowable level of ethanol in regular gasoline from 10 percent to 15 percent, could benefit if U.S. dependence on foreign oil fell.

Phil Flynn, an oil analyst at PFGBest Research in Chicago, said Growth's strategy was a sign the ethanol industry, which has gone through several bankruptcies this year and last, was experiencing troubles during the recession.

"The industry is hurting right now and they want to get a boost by trying to get a little nationalism around a barrel of oil and push alternative fuels," he said.

Even if Growth persuaded lawmakers to craft a bill and it got passed, a labeling plan for fuels could be harder to implement than one for goods like shirts and autos because fuel from several sources can often get mixed by the time it comes out of the pump.

Clark said it would be up to the fuel industry to decide how to implement the labels.

It could also be difficult to make a dent in sales from foreign oil producers because of the global market, Flynn said.

"At the end of the day, if we end up not buying that oil, it's just going to be bought by someone else."

Growth Energy also launched a website called www.labelmyfuel.com which details its calculations on the cost of American dependence on foreign oil.

(Reporting by Timothy Gardner; Editing by Marguerita Choy)

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