Battle over gasoline

Ethanol levels should reflect concern for stakeholders

The federal intent to boost ethanol in the gasoline mandate is being cheered by farmers and condemned by oil refineries. As a court battle looms, the government should alter course.

The announced mandate, refined this month by the U.S. Environmental Protection Agency, will boost the amount of ethanol by up to 770 million gallons that oil refiners would need to blend to comply.

The problem is, there is not higher demand for gasoline in the United States. So the result of the mandate will not really help farmers but will potentially hurt oil refiners that face higher costs and possible job losses.

Each year, the EPA establishes the amount of ethanol to be blended into gasoline. That stems from a 2005 law that created the renewable fuel standard. It was intended to promote the use of ethanol, thereby curbing our reliance on oil from the Middle East, and to reduce air pollution by virtue of using cleaner fuel.

The mandate this year was for 15 billion gallons of ethanol. For next year, the Trump administration has proposed an additional 580 million to 770 million gallons. The increase is based on the amount not blended by dozens of small oil refineries that obtained exemptions over the last three years because compliance for them was too burdensome. (Farmers, who grow corn from which ethanol is derived, decried the exemptions.)

Oil refiners said the exemptions didn’t hurt farmers, claiming all of the ethanol produced last year was blended into gasoline. The government figures support that contention. The refiners said the higher mandate means that, to comply with the law, they will have to buy credits on an unregulated market and may have to buy foreign biodiesel fuel, both of which will be costly and could result in layoffs or refinery shutdowns.

The government could help the oil refiners, even with the higher ethanol blend mandate, by putting a cap on the cost of the credits they need to acquire to comply with the mandate.

The issue is of special interest to Pennsylvania which, by one industry estimate, has 33,000 jobs in the refining and petrochemical industries.

The new blend threshold favors the agricultural sector and that has prompted the threat of lawsuits from the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers.

The new mandate is open for public comment until Nov. 29. The Trump administration must find a remedy that both parties can live with.