Advisers are urging President Donald Trump to allow Congress to tackle biofuels reforms that would allow the administration to sidestep a potentially thorny issue before the midterm election, according to a report Thursday from Reuters.
Trump has struggled to reform the Renewable Fuel Standard (RFS) without angering both the oil industry and corn growers in rural states. Punting on RFS reforms would allow the president to avoid a sticky situation between two industries that generally support Republican policies, two anonymous sources told Reuters.
The White House has met in recent months with constituencies aimed at finding ways to broadly change aspects of the RFS, a decade-old law intended to help farmers and reduce fuel imports. Trump has floated the idea of capping the price of blending credits that refiners must acquire to prove compliance.
The RFS program requires refiners to blend ethanol and other biofuels into the country’s diesel and gasoline supply. Refiners must purchase Renewable Identification Numbers (RINs) if they do not participate in the program. Complying with the program, oil refiners argue, drives up the costs of refining oil into gasoline.
Reports show that RFS helped drive at least one refiner into bankruptcy. Philadelphia Energy Solutions cited low oil prices and high cost of complying with the RFS for the need to file Chapter 11 bankruptcy, which comes six years after Energy Transfer Partners LP’s Sunoco rescued the company from financial distress.
The company secured access to $260 million in new financing, and said it expected the bankruptcy filing to have no immediate impact on its employees, according to a report in January from Reuters that was based on an internal memo from Philadelphia Energy Solutions. A spokeswoman for the company has not responded to reporters’ requests for comment.
Philadelphia Energy Solutions has plowed more than $800 million since 2012 on credits to comply with the law. The mandate is the company’s biggest expense, according to the memo. East Coast refiners have taken a bigger hit than other refineries across the country because of a reliance on crude imports from West Africa. They are also further away from the oil fields of Texas and North Dakota.
Trump will upset at least one faction of his base regardless the change, according to the sources, who asked not to be named as they were discussing a confidential matter. Two of the sources claim the president agreed with the advice, while the third source was not sure which direction Trump would take.
White House officials did not respond to a request for comment from Reuters, nor did officials at the Environmental Protection Agency, the agency responsible for administering the RFS.
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