Senators Feinstein, Leahy, Schumer, Boxer, Clinton Urge Attorney General Ashcroft to Review Purchase of Williams Cos. Ethanol Plants
July 11, 2002

Washington, DC - Citing concerns about the dangerously high concentration of the ethanol market, U.S. Senators Dianne Feinstein (D-CA), Patrick Leahy (D-VT), Charles Schumer (D-NY), Barbara Boxer (D-CA), and Hillary Clinton (D-NY) today urged Attorney General John Ashcroft to closely review the purchase of Williams Companies' ethanol plants.

A recent study by the General Accounting Office indicated that the ethanol marketplace is already so highly concentrated that federal mandates for ethanol use in gasoline could leave California and other states open to price spikes and supply disruption. The report indicated that the top eight ethanol firms control 71 percent of the domestic ethanol market, with ADM controlling 41 percent of the ethanol market and Williams controlling 6 percent.

In a letter to General Ashcroft, the Senators wrote: "Williams Energy recently announced it would sell its ethanol plants to strengthen its finances. Since Williams is among the top three domestic ethanol producers, we believe the Justice Department must aggressively monitor future ethanol plant sales and intervene when necessary to ensure the marketplace does not become even more highly concentrated."

"The sale of Williams's ethanol plants to one of its competitors could have severe repercussions on the price and supply of ethanol. A recent report by the General Accounting Office found the U.S. ethanol industry to have a Herfindahl-Hirshman Index score of 1866 -- well above the threshold for a 'highly concentrated' market. And domestic ethanol producers will most likely continue to be protected from any foreign competition by a high 54-cent per gallon trade barrier. Since Williams controls 6 percent of the market and the top eight ethanol firms control 71 percent, losing Williams will produce an even more dangerous anti-competitive environment.

We find the timing of this announcement especially worrisome since the Senate recently passed an energy bill that will force three times the amount of ethanol we currently produce into our fuel supply by 2012. Even an internal White House memorandum disclosed last month that the Council of Economic Advisors and the Federal Trade Commission have advised the President that this ethanol mandate 'is costly to both consumers and the government and will provide little environmental benefit.' For these reasons, we believe it is vital that the Justice Department closely review the purchase of Williams's ethanol plants."

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