Oil and ethanol industries asking Trump administration for action

Oil and ethanol industries asking Trump administration for action
Apr 23, 2020

The sectors are requesting opposite moves

By Diego Flammini
Staff Writer

Two competing sectors are asking President Trump’s administration to take action to help weather the storm brought on by the COVID-19 pandemic.

Governors representing oil-producing states have sent a joint letter to the Environmental Protection Agency (EPA) requesting the department exempt the oil-refining industry from national biofuel laws.

In December 2019, the EPA set a target of about 15 billion gallons of biofuel to be blended into the U.S. fuel supply in 2020.

But Governors Greg Abbott (Texas), Gary Herbert (Utah), Kevin Stitt (Oklahoma) and Mark Gordon (Wyoming) are asking the requirements to be waived in light of the coronavirus situation.

The pandemic has decreased the demand for oil as more people are staying home. U.S. oil futures have continued to slide, and Monday they fell below zero dollars, meaning sellers would have to pay buyers to take the oil.

Requiring oil refineries to continue with biofuel production would cause further hardships, the governors said.

“As our country comes to grips with this national emergency, continuing to implement the current (renewable fuel figures) imposes an added obligation that would severely harm the sector, and consequently harm the economy of the States and the Nation,” the April 15 letter says.

Louisiana Governor John Bel Edwards sent a letter with a similar request to the EPA earlier in the month.

The EPA has until the middle of July to make its decision.

Advocates of the ethanol industry are asking President Trump’s administration to take the opposite approach.

Social distancing protocols could reduce ethanol use under the Renewable Fuel Standard by up to 2 billion gallons.

With the reduction in demand, plus corn prices sitting below US$3.50 per bushel, now is the time for the EPA to increase the volume of biofuels required for the nation’s fuel supply to ensure the sector and farmers can succeed during the pandemic, the American Coalition for Ethanol (ACE) says.

“If EPA fails to act, this reduction in ethanol use would correspond to a loss between 350 and 700 million bushels of corn demand,” Brian Jennings, CEO of ACE, said in an April 3 letter to the EPA Administrator Andrew Wheeler. “This would cost ethanol producers over (US)$2 billion based on the six-month average price and farmers over (US)$1.35 billion in 2020 according to current pricing information.”

Farms.com has reached out to ag groups for comment.

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