Oil and Ethanol Both Use Saudi Attack to Push Their Policy Cases

Source: By Mario Parker and Jennifer A Dlouhy • Posted: Wednesday, September 18, 2019

Both advocates and opponents of proposed U.S. biofuel policy changes are using an attack on a Saudi Arabian oil facility to argue their cases.

America’s ethanol industry, the subject of White House deliberations to increase demand for the corn-based fuel, touted its use as a way to stabilize U.S. pump prices in the wake of Saudi oil disruptions.

“Diversification of our liquid fuel supply is the only way to truly insulate American consumers from the volatility and price shocks that plague the global petroleum market,” Geoff Cooper, chief executive officer of the Renewable Fuels Association, an industry trade group, said in a statement Monday. “The good news is we have a solution right here in America’s farm fields and rural communities.”

An Aug. 9 announcement by the Environmental Protection Agency that it waived 31 refineries from U.S. renewable fuel mandates caused an uproar in President Donald Trump’s rural Midwestern base. The administration has held a series of meetings trying to broker a deal that will placate farmers who argue the waivers work to curtail demand for corn and soy, used to make ethanol and biodiesel.

Meanwhile, oil industry advocates are seizing on the Saudi supply disruption to argue their case to the White House that now is not the time to make disruptive biofuel policy changes. And, they are amplifying their call for changes that would help keep prices in check for Renewable Identification Numbers, or RINs, the compliance credits that refiners use to prove they have fulfilled annual biofuel-blending quotas.

Under one plan pitched by some refiners and senators, the EPA could sell its own compliance credits if RIN prices skyrocket, with revenue steered toward building infrastructure to get more ethanol to consumers. In a letter to Trump last week, eight Republicans cast that as a way to ensure “a fair deal for both parties” and “an insurance policy” against high RIN prices.

Republican senators, including Ted Cruz of Texas and Pat Toomey of Pennsylvania, also have sought to press their case against the biofuel plan personally with Trump this week.

Denatured ethanol for October delivery climbed or 1.6% to $1.378 a gallon on the Chicago Board of Trade, on track for the highest price since Aug. 9.