AFPM challenges Trump biofuel, tariff policies in letter
- AFPM letter highlights split between oil producers and refiners
- AFPM criticizes EPA's handling of small refiner waivers
- Refiners face rising costs from EPA's biofuel blending rules
A leading U.S. refining trade group has criticized the Trump administration's biofuel policies in a letter to top Republican lawmakers, representing the oil industry's biggest rift with the president since his return to the White House in January.
The July 25 letter from the American Fuel and Petrochemical Manufacturers (AFPM), seen by Reuters, also reflects a growing divide between U.S. oil producers and refiners, an alliance that has fractured in recent years over biofuels policy.
Integrated oil majors like ExxonMobil and Chevron have used their large financial resources to invest in biofuel production while independent refiners like PBF Energy and CVR Energy complain the farm-friendly policy has created onerous costs that threaten their plants.
The letter sent to House of Representatives Speaker Mike Johnson and Senate Republican leader John Thune said current energy policies will negatively affect U.S. oil refiners, consumers and President Donald Trump's "energy dominance agenda."
The U.S. Environmental Protection Agency's (EPA’s) recent proposal to increase the amount of biofuels that oil refiners must blend into their fuel mix will put compliance costs around the federal rule near $70 B, the letter said. A new section in the proposal that reduces the value of imported biofuel feedstocks also will raise compliance costs, it said.
U.S. farmers and some in the oil industry have clashed over federal biofuel mandates, with farmers pushing for higher quotas to support crop demand and rural economies, while oil refiners resist, citing cost and infrastructure concerns.
The letter also criticized the EPA's handling of waivers for small refiners that exempt them from the biofuel blending obligations; the EPA's decision to allow temporary nationwide summertime sales of gasoline with a higher ethanol content; and tariffs on imported renewable feedstocks.
"We understand support for some of these policies is intended to help promote the domestic agriculture and biofuel industries, for which the above are clearly designed. But these policies should not come at the expense of the domestic refining industry and U.S. consumers," AFPM president Chet Thompson said in the letter.
The U.S. oil refining industry has been in doldrums for a decade as rising vehicle fuel efficiency, electric cars and the economic aftermath of the COVID-19 pandemic forced several plants out of business.
The industry’s capacity has, as a result, been stagnant at a little over 18 MMbpd of processing capacity, according to the U.S. Energy Information Administration (EIA).
Meanwhile, two major oil refineries in California – including the Phillips 66 plant in Wilmington and the Valero refinery in Benicia – are due to shut down in coming months, slashing the state’s capacity by nearly 300,000 bpd.
“AFPM has deep concerns with federal biofuel policy and the latest RFS proposal, especially. These are things we hope to address with the administration and Congress," an AFPM spokesperson said in response to this story.
Comments