From the March 2009 Idaho Observer:

More market manipulation by big oil

Rothschild, Inc., helping Valero take over ethanol, farms

By Anne Wilder Chamberlain

On Coast to Coast AM March 2, 2009, alternative energy advocate David Blume shared updates on alcohol fuel and related topics. Big oil companies are starting to take control of independent fuel markets, he warned, citing the case of Texas-based oil refiner Valero Energy Corp., which is buying the corn ethanol plants of bankrupt ethanol producer VeraSun Energy Corp. Such bankruptcies are related to the manipulation of futures contracts, he explained, noting that in previous bankruptcy courts futures contracts were the first to be honored, but not this time and, as a result, Valero is not only purchasing the ethanol plant at pennies on the dollar, but the farms as well.

On February 26, 2009, the International Institute for Ecological Agriculture (IIEA), a promoter of permaculture and alternative fuels directed by Blume, launched a campaign opposing Valero’s bid to acquire the assets of VeraSun. Blume said Valero’s offer demonstrates the end-game strategy for last year’s aggressive food-versus-fuel propaganda and price war manipulation campaign implemented by the International Oil cartel. "The campaign is systematically engineering the collapse of America’s fledgling independent renewable fuel and energy producers market," he said. It is likely that 40 percent of the nearly 200 ethanol plants operating in the U.S. will now be victims of Big Oil’s "slash, burn and buy strategy" to collapse, consume and control the ethanol industry.

 Valero, based out of San Antonio, TX, opened its first oil refinery in Corpus Christi, TX, in 1984. The company has since merged with PG&E natural gas and owns Exxon-Mobil, having acquired Mobil in 1998 and Exxon in 2000.

On Dec. 31, 2001, Valero completed its largest transaction to date when it merged with San Antonio-based Ultramar Diamond Shamrock Corporation. With this acquisition Valero became one of the nation’s top three refining and marketing companies. A milestone year of growth, 2005 is the year that Valero became the largest North American refiner and decided to "go global."

On September 1, 2005, Valero acquired Premcor, Inc., in an $8 billion transaction.  After adding Premcor’s four refineries in Port Arthur, Texas; Memphis, Tennessee; Delaware City, Delaware and; Lima, Ohio, Valero has 18 refineries and a total throughput capacity of approximately 3.3 million barrels per day (BPD). The company has total assets of $33  billion and annual revenues of nearly $75 billion, which would rank the company No. 15 on the current listing of the Fortune 500.

In addition, on July 1, 2005, Valero successfully acquired Kaneb Pipe Line Partners, L.P., in a nearly $2.7 billion transaction. By the end of 2005, Valero was one of the largest terminal and petroleum liquids pipeline operators in the United States. As of Dec. 31, 2005, the partnership had 9,186 miles of pipelines, 89 terminals and bulk storage facilities strategically located in major U.S. markets and in the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom.

"With the federal court ruling in the VeraSun bankruptcy, a legal precedent has been set that now allows buyers of bankrupt plants to renege on futures contract commitments for corn purchases," Blume said. "For the first time ever for any company, there may be an escape from paying for the futures contracts. The problem with this is that farmers have of course already borrowed money—based on futures pricing—to pay for higher fertilizer/chemical costs in producing the supposedly higher-priced corn. Unlike the plant owners, they won’t get to avoid their debts and there is a real chance that Big Oil will not only buy up the alcohol plants, but also reject the futures contracts, bankrupt the farmers and then be able to buy their land."

The IIEA is calling on citizens to contact Congressional representatives, the Department of Justice-Antitrust Division and the Federal Trade Commission-Bureau of Competition to express concerns regarding the Valero acquisition of VeraSun. According to Reuters Valero successfully acquired seven facilities in five states in bankruptcy court on March 17, 2009, for $477 million, outbidding agribusiness giant Archer Daniels Midland. Rothschild, Inc., is serving as a financial advisor for VeraSun in its transaction with Valero. The sale is expected to close in April.

Blume said that, according to Bloomburg News, Citibank and Morgan Stanley are spending their "bailout" bucks purchasing oil at $30 a barrel, storing it in rented tankers, and waiting until the price of oil goes back up to $150 a barrel, which Blume expects to happen rather soon. He noted that, although the cost of oil per barrel has stayed constant the last couple months, since December 17 the cost of gasoline at the pumps has increased by 50 percent.

If oil companies gain control of even a quarter of the ethanol production infrastructure and land for crops, they could for the first time have control of food and fuel from seed through fuel pump and could potentially bankrupt the rest of the industry. "If you think that it’s a nightmare that Big Oil controls our energy, think what life would be like if it controlled our land and food as well," he said. Blume said that members of the American Corn Growers Association want to get out of the corn market because they are tired of the continual manipulation of the price of corn by speculators. He said that plants such as sweet sorghum and cattails offer a much higher yield for fuel than corn. Blume has announced a series of workshops on alcohol fuel that he’s conducting around the country.

 Cars can actually run on up to 50 percent alcohol without any conversion process, he added.

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