Key facts
- The White House is pushing the EPA to grant more waivers to small oil refineries regarding biofuel blending mandates.
- This action is intended to lower gasoline prices ahead of the midterm elections.
- The EPA is expected to decide on 34 waiver requests by the end of the month.
- The proposed increase in waivers could significantly impact biofuel blending obligations and farmer revenue.
- RIN prices have already fallen due to the prospect of increased exemptions.
The White House is reportedly pressing the U.S. Environmental Protection Agency (EPA) to grant more waivers to small oil refineries, allowing them to reduce their biofuel blending obligations. This move is part of an effort to lower gasoline prices, a key concern for the administration ahead of the midterm elections.
Under current law, refiners must blend billions of gallons of biofuels like ethanol into their fuel or purchase blending credits known as RINs. Small refineries can apply for waivers if they face financial hardship. The EPA is reviewing 34 such requests and has projected approving waivers equivalent to about 1 billion RINs for the year. However, the White House is advocating for a higher volume, a push reportedly led by senior adviser Stephen Miller and the Energy Dominance Council.
Industry representatives anticipate the EPA may approve between 1.2 and 1.8 billion RINs in Small Refinery Exemptions, which would significantly cut into the total blending mandates. This potential expansion echoes a contentious issue from the previous Trump administration, which had expanded the exemption program, drawing criticism from agricultural interests.
Refiners argue that biofuel mandates increase operating costs and thus gasoline prices, while biofuel advocates contend that ethanol, a cheaper additive, increases supply and lowers prices. The push for waivers has already drawn opposition from agricultural states, with the attorneys general of Iowa, South Dakota, and Missouri sending a letter to the EPA urging rejection of broad requests. Senator Chuck Grassley also voiced concerns about near-record level exemptions potentially benefiting profitable refiners.
The prospect of large-scale exemptions has already impacted the market, causing RIN prices to drop to their lowest level in over four months. The American Soybean Association warned that high exemptions could eliminate substantial biodiesel and renewable diesel demand, costing soybean farmers approximately $1 billion in lost revenue.