The Environmental Protection Agency (EPA) is weighing whether to let oil refineries skip on adding ethanol to their fuels, a move being requested by governors in oil-rich states who say the industry can’t afford the expense of blending in biofuels as oil prices plummet.
Oil prices hit a new low Friday amid a number of administration efforts to ease financial pressure on the industry. Ethanol producers, however, say they have likewise been affected as the economy tanks due to the coronavirus.
In a letter to the EPA sent earlier this week, five governors from oil-producing states said their refineries should be off the hook from meeting legal requirements to add ethanol to their products, arguing the oil industry is in too dire of financial straits to do so.
“The macroeconomic impacts of COVID-19 have resulted in suppressed international demand for refined products, like motor fuels and diesel,” wrote Texas Gov. Greg Abbott (R), Oklahoma Gov. Kevin Stitt (R), Utah Gov. Gary Herbert (R), Wyoming Gov. Mark Gordon (R) and Louisiana Gov. John Bel Edwards (D).
Having to add ethanol “present[s] a clear threat to the industry under such circumstances,” the governors said.
Gasoline demand has fallen 30 percent due to the pandemic, something ethanol producers likewise say has hurt their bottom line.
“The COVID-19 pandemic, coupled with the effects of the Saudi-Russia oil price war, has had a devastating impact on the U.S. ethanol industry, slashing production by half and leading to the idling of dozens of plants across rural America,” the Renewable Fuels Association said in a release.
The pressure on the Trump administration to offer relief to refiners is just the latest chapter in the heated saga between ethanol producers and the oil industry, with the White House struggling to please two sides of the fuel camp that are so often in opposition.
The EPA has yet to make a decision.
“The agency is watching the situation closely, and reviewing the governors’ letter,” an agency official said in an email.