Old MacDonald Had a Gas Station — EPA Requires Increased Quantities of Ethanol in National GasolineSupply, but Producers are Skeptical
The Environmental Protection Agency has increased the total amount of ethanol and biodiesel that must be used in 2019 to 19.88 billion gallons under the Proposed Renewable Fuel Standard for 2019, a 3 percent increase over 2018 levels. Fifteen billion gallons of the blended gasoline will be traditional ethanol, made from crops like corn and soy, while the remainder will be composed of biofuels and biodiesel.
This change was bolstered by agricultural and renewable fuel lobbyists, who argue that American farmers suffer from low commodity prices and outsized tax burdens. The Trump administration supports the proposal as an effort to balance ethanol interests in farm country, and heavy pressure from oil and refinery businesses.
While the increase is pleasing corn and soy farmers that produce much of the country’s ethanol, many are worried that waivers issued by the EPA to oil refineries will pull the teeth of the Fuel Standard, making it essentially meaningless.
The waiver project was designed to assist small refineries undergoing financial hardship, permitting them to avoid fines that result from non-compliance with the Renewable Fuel Standard Program. The waivers have been criticized as being doled out indiscriminately, with a hardship waiver being granted to an oil refinery owned by billionaire Carl Icahn. Reuters reported that the move will allow Icahn’s Oklahoma facility to avoid tens of millions of dollars in costs related to the U.S. Renewable Fuel Standard (RFS) program.
State and national ethanol and biodiesel lobbyists estimate that waivers have cut the demand for ethanol by up to $1.6 billion gallons. The industry is seeking a commitment from EPA Administrator Pruitt that the waivers will stop with the new guidelines. In the Des Moines Register, Monte Shaw, Executive Director of the Iowa Renewable Fuels Association, said, “The ethanol number isn’t worth the paper it’s written on so long as Scott Pruitt is granting small refinery exemptions left and right,”
The EPA is now seeking to strike a balance, and weigh the competing interests of two politically-influential industries that are of unique importance to middle-America. The EPA will receive public comments on the proposed biofuels levels until August 17, 2018. A final rule is due by November 30, 2018