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U.S. Biofuels Overhaul Delayed

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Washington has shelved indefinitely a planned overhaul of the national biofuels policy that sought to reduce costs for the oil industry, two sources told Reuters, saying the move was the result of pressure from corn states prompted by concern such an overhaul will reduce demand for ethanol.

The news comes after months of tough negotiations as the administration has found itself on a tightrope between the oil industry on the one hand, and the ethanol industry on the other, with their interests at odds.

U.S. refiners are obliged to add a certain percentage of bioethanol to the fuel their produce every year and earn or buy blending credits—renewable identification numbers, or RINs—that they must present as proof of their compliance with bioethanol fuel quotas to the Environmental Protection Agency.

Refiners, however, have been complaining that these quotas are costing them dearly, so one of the changes envisaged in the planned overhaul of the U.S. Renewable Fuel Program concerned bioethanol exports being included in the annual quotas.

For corn farmers, on the other hand, the more bioethanol refiners add to the fuel, the better: the biofuels policy has created a 15-billion-gallon ethanol market for them. But the new deal would have seen an increase in the sales of high-ethanol gasoline, Reuters notes, which would have benefited corn farmers.

Related: Trump’s Bizarre Bid To Bailout Coal And Nuclear

The conflict is likely to continue, with or without a deal. In an April story, energy industry commentator Robert Rapier noted that oil refiners have spent billions on compliance with the Renewable Fuel Standard. Valero alone said last year it had splashed more than US$1 billion on compliance.

Rapier also quoted anti-ethanol quotas lobbyist Tim Constantine as saying, “RIN speculation is driving the market and costing consumers at the pump” and suggesting that refiners should be entitled to RIN waivers that would cost a modest sum to alleviate the pressure and help to reduce gas prices at the pump.

For now, however, any change aimed at helping refiners reduce their RIN-associated costs has been frozen. In this oil versus corn match, corn has won the game.

By Irina Slav for Oilprice.com

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  • Debra Uetz on June 08 2018 said:
    The Renewable Fuels Standard was begun during President George W. Bush's administration. It did indeed "demand" that oil refineries blend ethanol into their gasoline. However since that time the need for the RFS has disappeared; ethanol plants are established, fuel pumps show ethanol choice, states have mandated their own rules regarding purchasing of ethanol, the corn growers are selling their corn, bio diesel is taking over, or trying to, the large motor vehicles on the road, and consumers are still choosing gasoline over ethanol. Why? If this RFS was needed over ten years ago to establish ethanol production; why is the product they make noncompetitive to fossil fuel energy today? The RFS standard was established to lessen ethanol producers' need for government backed subsidies. The quality of ethanol should be well established and popular among consumers outside of corn country and the RFS mandate should be over with. But it is not; consumers still prefer real energy and ethanol plants still use massive amounts of natural gas (fossil fuel) to make their products, massive amounts of refined gasoline (more fossil fuel) to blend their products and transport it.
    Ethanol compared to the pure energy of refined oil just isn't independent enough to make its production worth the mandate of the RFS. Therefore, the RFS isn't needed because its product is based on forcing true makers of energy to blend what is not working as an independent fuel source.
  • Tom on June 06 2018 said:
    I don't believe that speculation is driving RIN Costs Higher, but rather Refiner's Refusal to blend in their required volumes of renewable fuels. If Refiners blended in their required volumes, (RVOs), then RINS would be of very low value, to no value at all. So, in reality it is the Oil Refiners who are driving RIN Costs Higher not speculators or the ethanol industry..

    I also don't believe that Refiners are spending Millions as stated "Complying with the Renewable Fuels Standard", Actually they are spending Millions to not blend ethanol into their fuels, that's THEIR Choice under the Renewable Fuel Standard. It would be far cheaper for them to blend in the ethanol than purchase RINS. The Renewable Fuel Standard is not some "new law" that just appeared on the books. The RFS has been with us in the Clean Air Standard since 2005, so Thirteen Years Later, in 2018, if you’re still purchasing RINS to supposedly "comply" with the RFS, it’s because you have CHOSEN to NOT Comply with the RFS and blend in your required volumes of renewable fuels but rather purchase RINS, so good for you, purchase your RINS and stop complaining about it.

    Let’s be clear. The easiest way to REDUCE RIN Costs and to also COMPLY with the RFS, is to allow the year-round sale of E-15 and higher ethanol blends in the Market Place. But the API and the REFINING INDUSTRY are Dead Set against this simple solution because their afraid of any REAL Competition in the fuel market. Ethanol with an Octane Rating of 113, truly is "A Better Fuel, For A Better Price", if it wasn't so the API and Oil Refiners would not be so Afraid of It!

    I think its time for BIG OIL and the API to GROW UP, and start worrying about CLEAN AIR and Less Cancer for the AMERICAN PUBLIC.

    Ethanol is the Answer not the Problem.

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