Trump Administration Shocks Oil Industry With Biofuel Waiver Decision

After shocking the oil industry with last week’s extension to a coastal drilling ban offshore Florida, Georgia, and a handful of other states, the Trump Administration said on Monday that is has rejected nearly the vast majority of retroactive biofuel waiver petitions that were pending review, according to a Reuters report.

Biofuel waivers are often given to oil refiners who are otherwise tasked with blending ethanol into their gasoline every year—or purchase tradable credits from refiners that blend with ethanol.

Refiners—especially small ones—have long argued that the requirements are cost-prohibitive. If they can prove economic hardship, they can be given a waiver.

The corn industry, on the other hand, argues that the federal government is in Big Oil’s pocket, and that it doesn’t take seriously enough the biofuel industry. The push-pull between the oil lobby and the corn lobby has created a massive political divide that is evident election after election.

In this election cycle, the blending waivers and blending credits have plagued President Donald Trump, who, like others before him, have been caught between angering the oil lobby or angering the corn lobby—with neither serving as an attractive option.

The disgruntled corn lobby, or biofuel industry, filed suit against the EPA this last January, challenging exemptions that were granted to specific refineries. The court ruled that the three waivers in question were granted unjustly. The problem, according to the court, was that those refineries were not granted waivers in the year prior, and that waiver requests could only be handed down as extensions of prior years.

The floodgates opened with that ruling, and any refiner that thought they needed a waiver rushed to submit petitions retroactively for years as far back as 2011 to plug the gap, so to speak.

The EPA has finally decided on many of those retroactive petitions, and for refineries, it’s not good news.

Between March and now, 68 petitions from 17 small refineries were submitted for prior years. Of those, 54 have been squarely rejected, in a sign that President Donald Trump is once again assuming the oil industry vote is his no matter what.

EPA Administrator Andrew Wheeler did not comment on how those rejections would affect the 31 outstanding petitions for 2019 and 2020, according to Reuters.

By Julianne Geiger for Oilprice.com