Governors' Biofuels Coalition

The raging battle between petroleum refiners and the ethanol industry took a new twist today, as President Trump promised a “giant package” to satisfy corn farmers, and refiners urged the president to steer away from biofuel mandates.

“The Farmers are going to be so happy when they see what we are doing for Ethanol,” Trump tweeted, adding that he’ll make moves to help small petroleum refineries, as well. “It will be a giant package, get ready!”

Trump’s tweet came as refiners stepped up their pressure on his administration not to offer any new concessions to biofuel manufacturers, which seem likely following backlash over EPA’s recent decision to temporarily lift the renewable fuel standard’s biofuel blending requirements for 31 small refineries.

“The RFS is a burden on all refineries, regardless of size,” said Chet Thompson, president and CEO of the American Fuel & Petrochemical Manufacturers, in a conference call with reporters.

Small refineries, he said, are “being smothered” by the cost of complying with the blending requirements, even though prices have tumbled in the last two years for the renewable fuel credits many of them buy in order to show compliance.

Trump didn’t say what moves the administration is considering. Industry sources say he could take further action to boost higher ethanol fuel called “E15,” such as allowing it to be sold as regular gasoline, or speeding the introduction of E15 in places where it’s not sold, or possibly directing EPA to rescind some of the small refinery exemptions it announced earlier this month.

“At the same time I was able to save the small refineries from certain closing,” the president added. “Great for all!”

The AFPM and American Petroleum Institute jointly wrote to Trump yesterday, seeking to persuade him that ethanol industry claims about sagging biofuel demand due to past refinery exemptions aren’t accurate and that U.S. Energy Information Administration statistics indicate biofuel consumption and production are at all-time highs.

In addition, Thompson told reporters, fuel that comes from small refineries — even those granted exemptions — is ultimately mixed with ethanol, suggesting no significant impact on demand.

With the administration possibly seeking to boost E15, refiners pushed back against that idea, saying many cars aren’t designed for the blend. Encouraging widespread use by labeling E15 as regular gasoline would be an “extremely bad” idea, Thompson said.

Ethanol advocates say the exemptions undercut the biofuels program and its annual volume requirements. They’ve blamed the exemptions for shutdowns of ethanol plants, which come at the same time farmers are seeing the effects of the administration’s trade fight with China in the form of high tariffs on U.S. farm goods.

In a tweet responding to Trump, the Renewable Fuels Association said 17 plants have closed or idled.

In addition, the association reported that ethanol consumption fell in 2018 for the first time in 20 years and was 300 million gallons below federal forecasts.

Depending on how the administration proceeds, Thompson said, the issue is likely to be settled in court or through legislation. Some of the moves being considered — including making E15 regular gasoline — could spark a lawsuit from the petroleum industry, he said.

Ultimately, Thompson said, his industry sees legislation replacing the RFS with a new gasoline octane standard as a solution that could benefit both sides by creating demand for ethanol while lifting mandates.

“We do believe there are win-win solutions out there,” he said.

Previous | Next