Farmers clash with oil industry over ethanol waivers

Gothenburg flex fuel plaza gives drivers five choices of ethanol blended fuel. (NTV News)

While the Farm Bill nears the finish line, the corn and oil industries clash over ethanol.

It gets complicated, but those on the farm side are frustrated.

The issue comes down to federal requirements for oil refiners, to blend ethanol into their fuel.

But some refineries, including some owned by a billionaire, have taken an exemption meant for those who would face a financial burden.

“If they could prove it was an economic hardship, there was an out for them. Well there's been big company that turned in those hardship requests and they've been granted, and so it's been really demand destruction for 2 billion gallons out of 14 or 15 or 16 out of the RVO, what the Renewable Volume Obligation is,” said Scott McPheeters, vice chair of the Nebraska Ethanol Board.

A spokesperson for the oil industry says they want an even playing field.

Sabrina Fang of the American Petroleum Institute (API) said in a statement, “API oppose small refinery waivers that distort the competitive marketplace and we continue to urge EPA to maintain a level playing field. Exemptions do not avoid a hardship, but rather provide exempt parties with a market advantage while creating RIN market uncertainty. If exemptions are granted, EPA should reduce the overall volume requirement and not increase the obligation for non-exempt refineries.”

As McPheeters hears it, he thinks the oil industry wants the government to just let it be, and not require more ethanol to make up the difference for what's lost due to waivers.

McPheeters, a Gothenburg farmer said ag producers are growing the corn needed for that ethanol. But because of waivers, he says it's hurt demand, and hurt their bottom line.

“It's a real big disappointment, it's a sad day for consumers, for Nebraska's economy and for everybody involved except oil companies,” he said of the waiver situation.

Senator Chuck Grassley of Iowa says the lost ethanol equates to more than 3 million acres of corn, which is like losing a third of Nebraska's corn crop.

But farmers could gain that and more when the president's directive comes to be, allowing 15 percent ethanol blends to be sold year-round, which McPheeters says gives consumers a choice.

“I'm encouraged it's a pull from the market — we want this fuel, rather than a mandate — you have to put this in,” he said.

Farmers would like both higher ethanol blends, and clarity on this waiver issue.

The Reuters news service reports the waiver program is under review.

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