|
 f
you're sick of wildly fluctuating gas prices, don't blame the oil
barons of OPEC — at least, not entirely. Part of the blame
can be laid squarely at the feet of federal and state clean fuels
regulations — and at the canny but ethically bankrupt manipulation
of those regulations by a single company, Unocal Corp. of El Segundo,
Ca.
Unocal effectively
obtained a patent on a regulatory standard it helped create —
supposedly as part of a cooperative and "public-spirited"
joint venture with other oil companies and air-quality officials
in the state of California. It was an unprecedented — and audacious
— shuck-and-jive by a company that no longer even sells gasoline
in the United States.
The idea was
for all parties concerned to work together to arrive at a single
standard for the so-called reformulated gasoline (RFG) that would
be required by law as part of air-quality-improvement programs.
Instead of each refiner or oil company producing slightly different
mixes of RFG — which would entail higher prices and supply
difficulties — the idea was to agree upon a single formula,
or "recipe" for RFG that would satisfy the regulatory
requirement, and thereby eliminate the problem of multiple types
of RFG, each slightly different in its chemical mix from the other,
being shipped in separate tanker trucks, or via "dedicated"
pipelines, at much greater cost.
Note the crucial
point that no new type of fuel (or additive) as such was being worked
out; rather, what was being attempted was mutual agreement upon
a mix of already well-known additives and refining processes.
Well, while
this "cooperative" venture was still in operation, Unocal
was furtively sending in patent applications that ultimately gave
the company property rights to what became the regulatory standard
for RFG. Other oil companies that wanted to produce motor fuel legal
for sale in California and other states that adopted the RFG requirement
would henceforth be compelled to pay Unocal a royalty equivalent
to about 5.75 cents per gallon — a boon worth millions, perhaps
billions — simply for complying with the legal technicality
they helped create.
Remember, no new type of fuel was created by Unocal; no new process
or technique. All that Unocal did was secure a patent on the legal
definition of RFG — a technicality — and thereby lock
out other formulations of RFG that might be equally effective at
curbing vehicle exhaust emissions, but which do not meet the specific
(and largely arbitrary) recipe set forth in the regulatory standard.
Government
regulators are finally investigating this sordid ploy. On Aug. 6,
the Federal Trade Commission and the U.S. Patent Office announced
jointly that they were looking into the whole business to determine
if, in fact, Unocal unlawfully "gamed" the regulatory
process to its financial advantage.
The evidence
sure suggests as much.
The California
Air Resources Board (CARB), which is the state regulatory body Unocal
"worked with" alongside the other oil companies, released
a letter in late July directed to the FTC that alleged Unocal "withheld
information from the state" and used "secret" patent
applications to secure rights to the recipe for RFG it was at the
same time working on "cooperatively" with CARB and the
other oil companies. CARB Executive Officer Michael Kelly wrote
that "Unocal's actions threatened the integrity of the rule-making
process" and could result in a markup of as much as 100 percent
in the cost refineries will have to pay in order to comply with
the RFG/clean fuels requirements. Federal officials had previously
cited Unocal's patent grab as one of the contributing factors in
last summer's gas-price spikes.
Unocal says
what its patent grab is "above reproach" — even though
it is profiting handsomely for creating nothing new and merely cashing-in
on a clever stratagem devised to turn the regulatory process to
its financial advantage.
Hopefully the
FTC and other federal agencies will step in and take appropriate
action. The regulatory process should not be allowed to serve as
a means of fleecing American motorists — who are the ones who
will ultimately be paying those nickle-per-gallon royalties to Unocal
in the form of higher at-the-pump prices.
|
