New Mexico oil and gas industry lobbies President Donald Trump against biofuel expansion
Biofuel industry accused EPA of lax standards for big oil.
- New Mexico Oil and Gas Association sends letter to Trump
- President urged to support lower biofuel blending standards.
- Biofuel industry criticizes federal policy
New Mexico oil and gas officials called on U.S. President Donald Trump to maintain lenient policy regarding biofuel blending with petroleum during production at refineries across the state.
In a Sept. 24 letter to Trump, Executive Director of the New Mexico Oil and Gas Association Ryan Flynn urged the President to not increase the ratio renewable fuels such as ethanol are required to be blended with refined petroleum, despite pressure from the biofuels industry.
The letter was backed by NMOGA’s Board of Directors including officials from major oil companies such as Marathon Oil, Chevron and ExxonMobil.
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U.S. Environmental Protection Agency requirements set standards for how much renewable fuel must be mixed in with crude oil to create fuel.
Ethanol is derived from corn crops and farmers challenged the Trump administration’s recent implementation of waivers to oil and gas refineries as driving down ethanol production.
But Flynn said the potential ratio increase required blending amounts that were not “realistically achievable” for current domestic production.
He pointed to the EPA’s mandate of 19.29 billion gallons of renewable fuel in 2018 when only 18.56 billion gallons were available domestically, as a reason to support the waiver.
The 2018 mandate created a deficit, Flynn said forcing American companies to import fuel to meet renewable fuel standard (RFS) compliance.
“Any increase of biofuels mandates will drive up consumer costs that impact the nearly 600,000 automobiles on New Mexico roads,” Flynn wrote in the letter. “Increasing biofuels mandates will also increase our dependence on foreign fuels to comply with federal requirements that don’t make sense in New Mexico.”
He called on the President to continue the current standards and support the refinery sector with waivers of certain biofuel requirements that could keep them in business.
The Association represents two refineries in Artesia and Gallup which Flynn said are “vital” to New Mexico’s economy and support up to 800 jobs.
“NMOGA believes that the status quo approach has unleashed U.S. Energy dominance while supporting vital refining jobs in New Mexico, Pennsylvania, Texas and Ohio and we respectfully request you to maintain the current approach.”
New Mexico was particularly threatened by an increase in biofuel requirements, Flynn said, as the state is not a major producer of such production and lacks infrastructure for blending.
“New Mexico’s liquid fuels markets struggle to meet the renewable fuel standard compliance due to the lack of domestic biofuels production in the state, cold weather climate changes, and limited infrastructure to blend biofuel products,” Flynn wrote.
Biofuel companies demanded the Trump’s administration stand by the renewable fuel standards, and accused the waivers of stymieing the biofuel industry and hurting rural economies.
POET, a South Dakota-based major bioethanol company announced in August it would idle production of a bioprocessing facility in Cloverdale, Indiana due to the Administration’s decisions regarding small refinery exemptions (SREs).
That plant will cease its processing of more 30 million of bushels of corn, read a POET news release, impacting hundreds of local jobs.
Production was reduced at half of POET’s biorefineries, read the release, with the largest reductions taking place in Iowa and Ohio.
The company also planned on layoffs across is 28 refineries as corn processing was expected to drop by up to 100 million bushels across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota and Missouri.
“The Renewable Fuel Standard was designed to increase the use of clean, renewable biofuels and generate grain demand for farmers. Our industry invested billions of dollars based on the belief that oil could not restrict access to the market and EPA would stand behind the intent of the Renewable Fuel Standar,” said POET Chief Executive Officer Jeff Broin.
“Unfortunately, the oil industry is manipulating the EPA and is now using the RFS to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process,” said POET Chairman and CEO.”
While the RFS allows exemptions for small oil refineries that process less than 75,000 barrels of petroleum per day and can demonstrate the standards would economic hardship, Broin argued the EPA has granted such leniency to refineries owned by oil and gas giants such as ExxonMobil and Chevron.
Such actions, read POET’s release, cut biofuels demand by 4 billion gallons, reducing demand for corn by 1.4 billion bushels.
“POET made strategic decisions to support President Trump’s goal of boosting the farm economy. However, these goals are contradicted by bailouts to oil companies,” said POET President Jeff Lautt.
“The result is pain for Midwest farmers and the reduction of hundreds of jobs and hundreds of millions of dollars of economic activity across Indiana.”
Trump announced in October 2018 that he was directing the EPA to expand waivers of the production of E15, or gasoline containing 15 percent ethanol.
Almost all gasoline sold in the U.S. is 10 percent ethanol.
The move would allow E15 to be sold all year, instead of the current requirement that only allows for its sale for eight months annually.
Trump said the move would support farmers by increasing the demand for corn, while also boosting the energy industry by giving consumers more choice.
“We want to eliminate the intrusive rules that undermine your ability to earn a living, and we will protect the corn-based ethanol and biofuels that power our country,” Trump said in a statement.
Adrian Hedden can be reached at 575-628-5516, email@example.com or @AdrianHedden on Twitter.