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A total of 27 small-sized U.S. refiners—a higher number than usual—have sought waivers from the biofuels standard program from the U.S. Environmental Protection Agency (EPA), Reuters reported on Thursday, citing sources familiar with the matter, in what could be a sign of heightened tension between the U.S. oil industry and the Corn Belt lobby.
Under the Renewable Fuel Standard (RFS), oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. The Midwest farm belt benefits from the policy, but the oil refiners do not—they lose petroleum-based market share of fuels, and meeting the blending requirements costs them hundreds of millions of dollars.
The U.S. biofuels policy has been pitting the oil refining industry against the Midwest farm lobby.
While U.S. President Donald Trump is a vocal supporter of the U.S. oil industry, he also supports the RFS, especially corn-based ethanol, which protects farming jobs in the states with large Republican majorities in the Midwest.
The number of requests the EPA is currently reviewing, 27, is unusually high, Reuters’ sources said on Thursday. But refiners have been emboldened by President Trump’s anti-regulatory policies and court rulings last year that extended the criteria for EPA to grant waivers, the sources noted.
The agency has the authority to grant waivers from the renewable fuel standard to refineries whose oil processing capacity is below 75,000 bpd.
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While the EPA usually does not disclose the waivers it has granted, it provided Reuters with data in response to a request under the Freedom of Information Act, showing that the EPA had issued a total of 29 waivers in the four years to 2016.
The refiners-farmers tug-of-war exacerbated earlier this week after Philadelphia Energy Solutions, the largest refining complex in the U.S. East Coast, filed for bankruptcy protection, blaming part of its financial hardship on the biofuels program.
U.S. Senator Pat Toomey (R-Pa.) commented on the bankruptcy filing:
“Today’s bankruptcy filing by Philadelphia Energy Solutions (PES) is a result of the counterproductive, job-killing, EPA-imposed Renewable Fuel Standard (RFS) that requires an excessive amount of biofuel be blended into the nation's fuel supply… I’ve had extensive conversations with PES management, senior EPA officials, my Senate colleagues, and directly with President Trump in an effort to resolve this situation.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.