Battle Between Ethanol And Refiners Reaches Stalemate

The current zero-sum battle between corn states and the biofuels industry on the one hand, and oil refiners on the other, is not new, but it exploded into a fierce fight over the past year as the Environmental Protection Agency  cracked open the door to a weakening of the Renewable Fuels Standard (RFS). The RFS dictates how much ethanol refiners need to procure. The exit of Scott Pruitt from the EPA could signal an end to open war between the ethanol and refining industries, returning it to a more familiar low-grade tug-of-war over annual blending requirements. The Trump administration has spent months trying to hammer out a compromise between refiners and the biofuels industry, but it has struggled to find any common ground. Advancing a proposal to the benefit of one side almost necessarily undermines the other. Ethanol producers argue the waivers are destroying the RIN market. But refiners say the RIN system is fundamentally flawed. “We simply want to correct the flawed and indefensible RINs compliance mechanism that is destroying the independent merchant refining industry and the thousands of families sustained by it,” Philadelphia Energy Solutions said in a February statement. This zero-sum dynamic has bedeviled the Trump administration, as it has prior administrations. But the support for refiners from Scott Pruitt’s EPA pushed the issue to the front burner, and the corn and ethanol industries, and their powerful allies in Congress, forced the issue.