Over at Forbes, Robert Rapier has a good analysis of the recent changes taking place at the EPA and how they impact the ongoing debate over ethanol blending and general health of the oil and gas industry. He describes it as a “good-news, bad-news” week for the ethanol lobby. That’s because President Trump’s EPA, now under the leadership of Andrew Wheeler, has been dishing out presents for them with one hand and smacking them down with the other.

Last week the agency unveiled a proposed rule to allow year-round sales of 15% ethanol fuel blends (E15). Year-round E15 sales had been restricted because of the potential to form smog from evaporative emissions.

The ethanol industry had long sought to sell E15 year-round and cheered the news. The new rule would also establish trading restrictions to curb speculation in renewable identification numbers (RINs). Speculation in RINs — which are used to enforce the ethanol mandate — has been blamed for driving ethanol prices higher at times.

But then Wheeler irritated the ethanol industry just a few days after announcing the E15 rule change, when he granted five new RFS waivers to refiners. Ethanol supporters who cheered the E15 change complained that the waivers let refiners off the hook.

I’ve already written about the new, year-round E-15 sales and why this is such a terrible idea. The real update to the story is the new Renewable Identification Number (RIN) credit waivers. The RIN credits must be purchased if a refinery is unwilling or unable to blend ethanol into their products at the rate demanded by the government under the Renewable Fuel Standard. These credits become openly traded financial instruments, having no actual value in the real world beyond Washington summoning them into existence. But they’re so expensive on this artificial market that some refineries have declared bankruptcy after paying for them. (Agri-Pulse)

The Environmental Protection Agency on Thursday disclosed five more small refinery exemptions from the federal biofuel mandates, adding to a climbing volume of waivers that companies are getting.

The news came through an update to EPA’s SRE dashboard, which showed 34 SRE requests have been granted, accounting for nearly all of the 37 applications the agency has received. Another two requests are still pending, and one request is listed as “declared ineligible or withdrawn.”

The waivers exempt small facilities — those producing less than 75,000 gallons of fuel per day — from the requirements of the Renewable Fuel Standard. Approved SREs have skyrocketed under the Trump administration, something the biofuels industry blames on former administrator Scott Pruitt. The agency attributes the increase to volatility in the Renewable Identification Number market and previous court cases mandating the EPA be less stingy with how it awards the exemptions.

Granting these exemptions immediately stuck in the craw of Iowa Republican Senator (and King Corn disciple) Chuck Grassley. He took to Twitter to air his frustrations.

Notice how Grassley immediately plays his default card of threatening the President’s political prospects. Change those policies to favor King Corn and further screw over the oil and gas industry that provides massively more jobs for this country because “Pres. Trump’s commitments to Iowa/Midwest hang in balance.” Also, it’s patently dishonest of the Senator to say that there have been “a billion dollars of corn demand lost.” I would hope that a conservative Republican would be more familiar with the free market and realize that any “demand” that only exists because the government is forcing you to do something to keep Iowa politicians happy isn’t demand at all. It’s blackmail.

Anyway, I suppose we simply have to take the (somewhat) good with the (very) bad in this case. The entire specter of the Renewable Fuel Standard was a bad idea when it was cooked up under George W. Bush, a worse idea when it was accelerated under Barack Obama, and it’s no better now that it’s being kept afloat by Donald Trump. The expansion of E-15 is bad news for everyone but the ethanol lobby. But a little of the sting is taken out of it when more small refineries are granted waivers. It’s all yet another reminder of why Iowa doesn’t need to go first in the primary process every four years. If we stopped doing that, the entire RFS would be gone within days of the next Republican majority being seated.

Read original