President Trump will meet with oil state senators, possibly this afternoon, as the White House referees a long-running dispute over ethanol’s share of the U.S. fuel supply. A major question is how the administration will make up for biofuel sales that farm groups and ethanol makers say were lost when the EPA exempted some small-volume refineries from complying with the Renewable Fuel Standard.
Three weeks ago, Trump said he would deliver “a giant package” that would satisfy the Farm Belt and save small refineries from closing. “Great for all!” he said on social media. Trump is expected to make a decision after hearing from senators from oil-producing and refining states. All sides say the president is likely tired of the RFS debate, which stretches from his early months in office.
“That would argue for an early announcement,” said Iowa Sen. Chuck Grassley, a bulldog defender of ethanol. Trump was scheduled to return to Washington on Wednesday night after a two-day swing through western states.
Trump met with midwestern senators last week, generating Corn Belt hopes that the RFS would be boosted by more than 2 billion gallons from the 20 billion-gallon target the EPA proposed for 2020. Oil state senators said in a letter to the president that a larger RFS is a non-starter. The gasoline market is saturated with ethanol at the traditional 10 percent blend, and the underlying problem is overcapacity among ethanol makers, they said. If Trump boosts the RFS, refiners should be given a “biofuel waiver credit that can serve as a safety valve in case RFS compliance costs … skyrocket.”
“We wouldn’t want a RIN cap. That would be bad,” said Grassley during a teleconference on Tuesday. Refiners are obliged to buy ethanol credits, known as RINs, if they don’t mix enough ethanol into gasoline. The oil industry has complained of excessive RIN prices in recent years. Grassley said ethanol proponents want a system where “anything they [EPA] waive is added back in” to the overall ethanol mandate. In recent months, the EPA has issued “hardship” waivers to 31 refineries that said they faced high costs in meeting 2018 RFS targets.
A RIN credit or an export credit for ethanol are two possible solutions, said a lobbyist for the oil industry on Wednesday.
“I’m going to wait and see what the EPA does,” said Grassley. “You know what I’ve said about EPA being a tool of Big Oil.”