API questions possible RIN tradeoff if more E15 allowed on market

An American Petroleum Institute official expressed strong skepticism about statements from the Trump administration that extending a volatility waiver to gasoline with a 15% ethanol blend in exchange for reforming renewable fuel credits for refiners and blenders would be a possible satisfactory solution for all concerned.

“This was never a deal to begin with. It’s not a win for industry, and it’s certainly not a win for consumers. We do not view this as a fair, balanced policy at all,” API Downstream and Industry Operations Group Director Frank J. Macchiarola said on Sept. 28.

Setting limits on the trading of Renewable Identification Numbers (RIN), which EPA established as a way to help refiners and blenders meet quotas under the federal Renewable Fuel Standard (RFS), “may hamper market liquidity, and in no way compares to the significance of allowing more incompatible fuel into the marketplace,” Macchiarola told reporters.

He called issuing an E15 waiver “a flawed anticonsumer policy,” since studies by automakers and the oil and gas industry have shown that more extensive use of the higher ethanol blend potentially could leave consumers on the hook for extensive repair bills. “In fact, three out of four vehicles on the road today were not designed for E15,” Macchiarola said.

His observations came days after API Pres. Mike Summers and American Fuel & Petrochemical Manufacturers Pres. Chet Thompson jointly expressed their concerns in a Sept. 25 letter to President Donald Trump about reports that EPA may extend the 1 lb Reid Vapor Pressure waiver to motor fuel with 15% ethanol (OGJ Online, Sept. 26, 2018).

“Secondly, this decision is contrary to the clear letter of the law as it is explicitly disallowed under the Clean Air Act,” Macchiarola said. “You don’t have to take my word for it—in the past, EPA has agreed numerous times that the agency does not have the authority to extend the RVP waiver to E15.”

Finally, the decision potentially could destroy an opportunity for consensus since lawmakers on both sides of the aisle in Congress agree that the RFS is a badly broken program which needs to be fixed, as does the president, he said.

“This so-called deal from EPA does nothing to fix the program, and only makes the RFS RIN requirements even more burdensome for refiners,” Macchiarola said. “It arguably makes it worse and certainly makes it more difficult to achieve consensus RFS reform that is lasting and meaningful.”

Contact Nick Snow at [email protected].