'Terror-free' oil makes U.S. debut

Group tries to sell gasoline purchased only in the United States and Canada, but experts say verification is impossible.

By Katy Byron, CNN business desk editor

NEW YORK (CNN) -- A group that seeks to eliminate U.S. consumption of foreign oil opened a gas station dubbed Terror-Free Oil on Thursday.

The group says its gasoline is primarily produced in countries that do not support terrorism, but observers - and the station's operators - say it may be hard to be sure of that.

The Omaha station, recently acquired by the Terror-Free Oil Initiative group, only sells gasoline provided by Sinclair Oil Corp.

TFOI works only with companies that sell oil from "countries that do not export or finance terrorism" and because the majority of Sinclair's oil comes from the United States and Canada, the company meets the group's criteria, TFOI founder Alex Porter told CNN.

But both Sinclair and TFOI acknowledge there is no way to track the origin of all the oil from the ground to the pump.

Dalton Kehlbeck, Eastern regional manager for Sinclair, confirmed that the majority of the oil his company sells is from the United States and Canada, but he added there is no way to know what oil from other countries has gotten mixed in during transport through the pipelines - which Sinclair does not operate.

Sinclair also purchases oil that is traded on the New York Mercantile Exchange. The Energy Information Administration's Jonathan Cogan explained that oil bought on the NYMEX is on the open market, so the purchaser does not know where it's coming from.

John Felmy, chief economist for the American Petroleum Institute, called the terror-free oil concept "absurd" because, for example, "TFOI lists Amerada Hess (Charts) as a company that doesn't import from the Persian Gulf, but they may buy oil from Exxon Mobil (Charts) and then sell it on the exchange market."

And the API's John Bisney pointed out another problem, saying the initiative is "an interesting concept but the economic reality means it can't be terribly effective because that oil will find other markets and oil that went to those markets is displaced and goes to the U.S."

Porter argues that since Sinclair does not seek to buy oil from overseas, it meets TFOI standards.

"We can guarantee that we are not going to work with a company that imports Middle Eastern oil," he said.

Kehlbeck would not comment on the mission of the TFOI and whether Sinclair supports the group's goals.

TFOI is financed by a number of anonymous and named donors who are listed on the company's Web site.

No financial supporters of the group are employed by the U.S. government or are affiliated with Washington lobbyists, Porter said.

He said the issue of foreign oil consumption is not a partisan one. "This is a pro-American issue because pretty much if you're Republican or Democrat you can subscribe to alternative energy sources and energy independence."

Porter said TFOI has three goals:

-- To reduce money to countries financing and harboring terrorists by decreasing the amount of oil bought from those countries. "American foreign policy is not going to be held hostage to the will of foreign governments," he said.

-- To eliminate, completely, Middle-Eastern produced oil from the U.S. market.

-- To eliminate oil demand altogether, by replacing it with energy alternatives.

Porter said eventually they'd like to sell E85 ethanol and diesel fuel at the gas station. He also said TFOI is looking at opening other stations nationwide, but would not say where.

Gas at the station - a Sinclair-branded facility it bought in late 2006 - will be sold at market price, Porter said.


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