Refiners ramp up pressure on Biden for relief from high biofuels costs

Source: By James Osborne, Houston Chroncile • Posted: Monday, June 21, 2021

President Joe Biden speaks about his administration's global COVID-19 vaccination efforts ahead of the G-7 summit, Thursday, June 10, 2021, in St. Ives, England. (AP Photo/Patrick Semansky)
President Joe Biden speaks about his administration’s global COVID-19 vaccination efforts ahead of the G-7 summit, Thursday, June 10, 2021, in St. Ives, England. (AP Photo/Patrick Semansky) Patrick Semansky, STF / Associated Press

WASHINGTON — Oil refiners are lobbying the Biden administration to adjust the nation’s biofuel mandate to provide relief from a record spike in the price of the renewable fuel credits they’re required to buy to meet federal obligations.

With fuel demand still recovering from the COVID-19 pandemic, the price of biofuel credits, known as RINs, has more than doubled from last year to over $2 per credit — the highest price in the program’s 15-year-history. That could stick U.S. refineries with a bill of more than $30 billion for the year, according to the Association of Petroleum and Petrochemical Manufacturers.

“Where politics are concerned, billions and trillions don’t mean so much. But for merchant refineries, these bills are crushing,” said Derrick Morgan, senior vice president of federal and regulatory affairs at the trade group. “The president should look at these numbers and take swift action to reform the biofuels program.”

President Biden is under pressure not only from refiners but also labor unions representing refinery works and even members of his own party, including Democratic senators from his home state of Delaware, Chris Coons and Tom Carper.

Last week Reuters reported the administration was considering offering relief, possibly by waiving some refiners’ obligations — something that former President Donald Trump did on multiple occasions — or by lowering future biofuels mandates.

A spokesman for the Environmental Protection Agency, which administers the biofuels program, said the agency is, “working to get the (biofuels) program back on track, and we continue to engage with all stakeholders in that effort.”

Ethanol producers, along with the Midwestern senators that represent them, are pushing back, arguing that RIN prices are high because not enough ethanol and other biofuels are being blended into the U.S. fuel supply.

“We’ve lost more than 4 billion gallons of renewable fuel blending requirements. That had a devastating impact on biofuel and corn prices,” Geoff Cooper, president of the trade group Renewable Fuels Association, said in a recent interview. “We can not afford to go though another round of waivers at a time the industry is just recovering from COVID.”

For Biden, the spike in biofuels prices put him in the middle of two key constituencies, the blue-collar workers who man the nation’s refineries in Texas and Pennsylvania and the Midwestern corn farmers for whom ethanol is a lucrative market.

At the same time, his ability to offer relief could be limited. The U.S. Supreme Court is considering a lawsuit claiming the EPA exceeded its authority under Trump in handing out biofuel waivers, with a decision expected any day.

“I have some sympathy for the Biden administration. President Trump left the program in a mess,” Morgan said. “They didn’t cause this problem, but they certainly inherited it.”

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