Oil lobby: Iowa politics behind Obama's ethanol moves

Prominent oil lobby the American Petroleum Institute (API) said the Obama administration will likely boost the amount of biofuels refiners must blend into the nation's fuel supply to help out a Democrat in a tight Senate race.

Democratic Rep. Bruce BraleyBruce BraleyCriminal sentencing bill tests McConnell-Grassley relationship Trump's VP list shrinks Vernon wins Iowa House Dem primary MORE is running against Republican Joni Ernst for the open Senate seat left by retiring Sen. Tom HarkinTom HarkinGrassley challenger no stranger to defying odds Clinton ally stands between Sanders and chairmanship dream Do candidates care about our health or just how much it costs? MORE (D) in Iowa, and the two are neck and neck.

If the Environmental Protection Agency (EPA) ups the levels of ethanol and other biofuels it requires refiners to blend in its final 2014 rule, it may be enough to push Braley ahead in the race, the oil lobby said.

"It's clearly politics," said Bob Greco, director of API's downstream operations. "There is a strong linkage to what's going on in the Iowa Senate race."

"I think you are starting to see the political calculations. We are very concerned that the signals we are seeing from the administration is that the political calculations are outweighing sound fuels policy," Greco added.

When the EPA proposed the 2014 renewable fuel mandate late last year, it retreated on the amount of biofuels that must be blended in the U.S. fuel supply, a clear victory for the oil industry, which fiercely opposes the mandate.

The cut signaled the first time the EPA proposed lowering the requirement, but since then the White House and the EPA have indicated the final version of the rule will raise the fuel levels once again.

White House adviser John Podesta told Senate Democrats in a July meeting that the numbers would be bigger in the final rule, irking oil companies.

"I believe the numbers will be bigger and that's based not only on conversations with [Podesta] but my conversations with EPA Administrator Gina McCarthyGina McCarthyConvention shows Democrats support fracking, activists on the fringe Overnight Energy: Officials close in on new global emissions deal EPA chief: US, negotiators nearing new emissions deal MORE," Sen. Al FrankenAl FrankenParty unity overcomes chaos...and the Bernie-or-Bust crowd The Hill's 12:30 Report Podesta: 'We need to move on and consolidate around Hillary' MORE (D-Minn.) said after the meeting. "He certainly led us to believe there will be higher numbers in each piece of it than was in the preliminary [Renewable Fuel Standard]."

EPA chief Gina McCarthy made similar comments at an energy conference earlier this month, saying the numbers would change in the final rule.

The EPA has said the "continued growth of renewable fuels" over time is a key priority of the fuel mandate.

Due to the delay in releasing the final 2014 mandate, and comments by the administration, the API said it thinks the numbers will be higher and that will help Braley.

Braley supports the renewable fuel mandate and has called on the administration to raise the levels in its proposal. Iowa is a large farming state and grows corn used to create ethanol.

"It's a tight race, one that many did not expect to be tight," Greco said.

 —Tim Devaney contributed to this report.