A group of strange bedfellows, namely the oil and renewable fuel industries, are coming together in a rare call of support for the Environmental Protection Agency's renewable fuel program.
The groups, which can sometimes be found suing one another, sent a letter Wednesday night asking EPA Administrator Gina McCarthy not to sign off on a change proposed by refining giant Valero and Monroe Energy to the Renewable Fuel Standard that would fundamentally change the program and create even more havoc for oil and renewable fuel companies.
The program requires refiners to blend higher and higher amounts of renewable fuel into the nation's gasoline and diesel supplies. One need only glance at a fuel pump to see the fingerprints of the standard, usually a sticker that says the fuel contains 10 percent ethanol.
But Valero said it has become incredibly costly and burdensome to comply with the standard given consumers' lackluster demand for higher blends of ethanol in gasoline above 10 percent. The company petitioned the EPA and the D.C. Circuit Court of Appeals to rearrange the program to put the fuel retailers that deliver the fuel to local convenience stores and gas stations on the hook to meet the requirements, instead of the refiners.
The American Petroleum Institute, which represents companies such as Shell that own large refineries as well as drilling facilities, is one of the principal groups opposing the Valero proposal, with the Renewable Fuels Association and Growth Energy that represent some of the largest ethanol producers in the country.
The alliance will become even more important after the Trump administration takes office in January, when reform of the fuel standard is expected to be a front-and-center concern, say observers. A major point of contention in those discussions will be the "point of obligation."
Valero argues that it would help the EPA meet its goals by providing incentives for chain stores and others to install the necessary pumps to provide higher blends of ethanol.
But given that the largest oil trade group, together with the largest ethanol trade groups, are standing in opposition to the idea, it doesn't seem to have that much traction. But Valero is a large company with a lot of sway.
"There is no sound public policy rationale for moving the point of obligation and further, such a change would add complexity and uncertainty to the current RFS program," the letter stated. Convenience store representatives have warned that the change would cause an "upheaval" in the nation's fuel market by adding costs for retail providers of fuel, which in turn would mean higher prices for gasoline.
The EPA had said earlier in the month that it does not plan to adopt Valero's proposal. But the groups want McCarthy to ensure it is official soon. The agency is expected to open a 60-day comment period on the petitions, which now include a petition by the refiners' lead trade group, the American Fuel and Petrochemical Manufacturers.
Others on the API letter include the National Association of Convenience Stores, National Association of Truck Stop Operators, Petroleum Marketers Association of America, Society of Independent Gasoline Marketers of America and the Advanced Biofuels Association.