EVANSVILLE, Ind., (UPI) — The Trump administration may require large oil refineries to increase ethanol in their fuels next year to make up for the U.S. waiving ethanol blending requirements at 31 small refineries this summer.
Farmers around the county welcomed the news Friday because they had feared those refinery waivers would drive down the price for corn as demand ebbed.
“This is a real positive step,” said Ted Mottaz, an Illinois corn grower who is president of the Illinois Corn Growers Association. “We’ve got to have a market for our crop.”
But, to the oil industry, Friday’s announcement is troubling.
“The misguided reallocation of volumes punishes companies working to comply with the [Renewable Fuel Standard],” a joint statement from the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers said.
“We are deeply concerned about the administration’s decision to, once again, play politics with our fuel system by increasing an already onerous biofuel mandate, placing greater strain on the U.S. manufacturers he promised to protect,” the statement said.
The new proposed requirement is part of an agreement between the Environmental Protection Agency and the U.S. Department of Agriculture. As part of that agreement, the EPA is proposing that “more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply … accounting for the relief expected to be provided to small refineries.”
The EPA announced Aug. 9 that it would grant hardship waivers from the biofuel blending requirements outlined in the Renewable Fuel Standard to the 31 refineries.
In the wake of that decision, ethanol prices hit a five-year low, and several ethanol processing plants ceased production.
Farm groups worried the move would be even more damaging to prices come fall harvest time, when the market would be flooded with corn and soy used to make ethanol and biodiesel.
Farm commodity prices already have suffered this year from the Trump administration’s various trade disputes that have reduced commodity exports.
“It’s no secret we face a difficult farm economy,” American Farm Bureau Federation President Zippy Duvall said in a statement. “This announcement comes at a crucial moment in time. Farmers Across the nation applaud this decision.”
In addition to the EPA action, the USDA will seek opportunities for “infrastructure projects to facilitate higher biofuel blends,” the announcement said.
“The president … has found a way to pursue policy that promotes economic growth and supports our producers,” USDA Secretary Sonny Perdue said in a statement.
“This forward-looking agreement makes improvements to the … program that will better harness the production of our farmers and ensure America remains energy dominant.”