For almost a decade and a half, the Renewable Fuel Standard has forced oil refineries to use a certain amount of ethanol—derived primarily from corn.
But the RFS also allows for certain “small refineries” to receive exemptions, meaning that if a refinery can show it is experiencing “disproportionate economic hardship,” the company can apply for a waiver. With that waiver, the refinery can save money by forgoing the ethanol requirement.
This waiver program has been around for years, but previous administrations have not exercised them very much. In 2013 and 2014, the Obama administration approved eight waivers per year; in 2015, only seven. In fact, the Obama administration was accused (by the oil industry, mostly) of being too stingy with the waivers. But the Trump administration has gone the other direction. In 2017, Trump’s EPA issued 35, and the EPA announced recently that 31 would be approved for the year 2018—a huge jump.
Oil companies love these waivers. Ethanol and other biofuels are expensive, compared with crude oil, and there’s nothing the oil industry loves more than money. According to Reuters, these waivers can save the oil companies tens of millions of dollars.
For pretty much everyone else, these waivers are a ridiculous and unnecessary favor to the oil industry. Those “small refineries” that have received waivers in the past include none other than Exxon Mobil—hardly a mom-and-pop operation.
Farmers and corn-growing operations are furious. These exemptions can total billions of gallons of unpurchased ethanol, which means billions of dollars that isn’t going to American farmers. Nearly 40 percent of the American corn harvest is used for ethanol, and the Renewable Fuel Standard is the law that ensures there’s a buyer for that corn. If oil refineries can weasel their way out of using it? That’s a serious blow to American agriculture’s bottom line, at a time when trade wars, heat waves, and floods are already dealing haymakers left and right.