Fuel Talk: White House Tries to Balance Oil and Biofuel Interests

The White House recently convened a meeting with oil refiners and biofuel producers to address a long-standing issue regarding biofuel blending rules. The Trump administration is on the verge of deciding whether larger refiners should compensate for the billions of gallons of biofuels that were exempted for smaller refineries. This decision, initially slated for the end of October, was delayed due to the government shutdown.

A Delicate Balance

These meetings highlight the administration's challenge in satisfying both the oil industry and the farm sector, both of which wield significant political influence. The oil industry contends that blending mandates jeopardize refinery jobs, while farmers argue that the exemptions have diminished demand for corn-based ethanol and other biofuels. The outcome of this deliberation could impact fuel prices, farm incomes, and energy policies as the nation approaches the next election cycle.

E15 and Exemptions

The discussions also revolved around making E15, a gasoline blend containing 15% ethanol, available year-round. The administration might couple this with reforms to the small refinery exemption program to garner support from both industries.

Renewable Fuel Standard

Under the U.S. Renewable Fuel Standard, refiners are required to blend biofuels into the fuel supply or purchase compliance credits. Small refiners can obtain exemptions if they demonstrate economic hardship. The Environmental Protection Agency (EPA) has cleared a backlog of exemption requests dating back to 2016. The EPA estimates that 2.18 billion gallons of blending obligations will be waived from 2023 through 2025.

Industry Reactions

Biofuel groups advocate for non-exempt refiners to compensate for the waived gallons to sustain demand for renewable fuels. However, refiners oppose this, citing increased regulatory costs. The American Petroleum Institute, representing the oil industry, commended the administration's efforts to find a practical solution on E15 and exemption reforms.