Parts of the transportation industry are worried that a Trump administration proposal to reduce the amount of biofuels blended into the nation's fuel supply will drive up prices.
Convenience store owners and truck stop operators, who interact directly with the users of fuel, say they have plenty at stake if the Renewable Fuel Standard were weakened.
"At a high level, truck stops play an integral role in the functioning of the Renewable Fuel Standard, because biodiesel is the most critical renewable fuel source under the program and most biodiesel is sold at truck stops," said David Fialkov, vice president of government relations at the National Association of Truck Stop Owners. "The Renewable Fuel Standard should allow us to incorporate renewable fuel into supply in a manner that allows us to lower the price charged to customers for fuel."
The Renewable Fuel Standard, a law passed in 2005 under President George W. Bush to promote renewable fuels such as ethanol and biodiesel, requires a certain amount of biofuels to be blended into the nation's fuel supply.
Environmental Protection Agency Administrator Scott Pruitt has proposed targets for 2017 and 2018 that are slightly below current levels after oil companies complained about the costs of blending ethanol and other biofuels.
Under the law, refiners must blend ethanol or other biofuels into their products or purchase credits, known as Renewable Identification Numbers, from refiners that do.
The prices of those credits, which had been stable, have jumped in recent years, which oil refiners say drive up pump prices for consumers.
The EPA, which must finalize the regulations by Nov. 30, is looking to cut the total renewable fuel requirement from 19.24 billion gallons under the proposed 2018 standard to 18.77 billion gallons for 2019, a 2.5 percent cut.
It proposed cutting the already established 2018 volumes of biodiesel, which was set at 2.1 billion gallons, by up to 315 million gallons, which would be 15 percent.
Sen. Chuck Grassley, R-Iowa, and other Midwestern lawmakers have threatened to hold up President Trump's EPA nominees over the proposed cut, arguing the move would result in job losses for local farmers that produce the corn, soybeans and other agricultural components that go into the fuel.
Fialkov, the truck stop representative, and others working in the transportation industry, have different concerns.
Biodiesel is primarily used to fuel trucks, and Fialkov says the Renewable Fuel Standard has made the fuel cost competitive with traditional diesel.
"Lowering the renewable fuel mandates under the Renewable Fuel Standard would disincentivize many truck stop operators from blending biodiesel and selling biodiesel," Fialkov said. "For truck stop operators who are able to effectively blend and capture value associated with blending biofuels, they are able to sell fuel at a lower price, and that drives more volume. If the EPA discourages us from blending biodiesel in a manner that raises the price of fuel, invariably we will blend less biodiesel, which will raise the cost of fuel. Truckers will continue to drive, but just pay more."
The trucking industry, meanwhile, is not taking an official position on the proposal. Glen Kedzie of the American Trucking Associations says his trade group is watching the debate closely.
The organization represents large companies such as UPS, FedEx, and Walmart, as well as smaller entities that use 20 trucks or less.
The nation's "3.5 million truck drivers in our industry want to make sure fuel is available to move trucks and can get products to shelves," Kedzie said. "We are very price sensitive to fuel. It's our lifeblood."
Kedzie says costs of biodiesel have been stable because of the EPA mandate, as truckers have come to rely on the fuel.
"We typically use consumer biodiesel, not by choice, but by requirement," Kedzie said. "If you are a fleet and have to refuel in a state with a strong mandate like Minnesota, Pennsylvania, or California, you are a captive audience on what you put in your tank. The costs are kept in check — or at least had been kept in check."
The trucking industry has small profit margins. He says trucking companies compete for jobs primarily on costs and that uncertainty about fuel supply policy could complicate planning efforts.
"Everyone is competing to haul a load from Point A to Point B," Kedzie said. "Labor costs are set. You know what you will pay a driver. You need to nail down what the cost of fuel is. The low bidder would get that load. You better be pretty accurate in predicting what the price of fuel will be."
Paige Anderson, director of government relations at the Association for Convenience and Fuel Retailing, has similar worries.
Her trade group represents more than 154,000 convenience stores across the U.S. that sell 80 percent of the country's motor fuel, she said.
Anderson is concerned that the EPA's proposal treats biodiesel differently than other biofuels.
"We are very concerned with this latest EPA effort to bring that one obligation down so low without looking at the others," Anderson said. "All obligations are intertwined. Either you need to lower all obligations or keep it as is."
Economic and energy experts say they expect the EPA's proposed changes to have little impact on the transportation industry and consumers, mostly because biofuels represent only about 10 percent of total transport fuel in the U.S.
"Even increased mandates of biofuels still represent a very small percentage of the overall transportation fuel market," said Nick Loris, an economist at the Heritage Foundation who focuses on environmental and energy issues. "You won't see a serious economic impact on consumers from reducing biofuel."
Loris, who opposes the Renewable Fuel Standard, said the mandate creates distortions in the marketplace.
"Policies change all the time," Loris said. "In some instances, there will be winners, in others there will be losers. It's OK to discount the certainty for an industry if it's relying on a mandate or subsidies or preferential treatment from the federal government. We have to see whether biofuels can be stable in a market where there is no RFS."
Christopher Knittel, an economics professor at the Massachusetts Institute of Technology, also says consumers won't be affected by changes to the biofuel rules.
"We know from basic economics that a stricter RFS puts upward pressure on retail prices, but because it's a small share of total fuel, it never will have a huge impact on what consumers pay," Knittel said. "The RFS is a small tax on 10 percent of our fuel spread across the U.S. Even though it is good at giving money to the Midwest, no one feels pain from it on a large scale. I don't think this policy should live or die based on how it impacts retail prices."
Anderson says she is trying to be ready for anything after the public comment period on the EPA's proposed changes ended Oct. 19.
Because of widespread opposition to the plan, the White House recently asked the EPA to halt its changes. And Thursday night, Pruitt ensured Republicans that he would keep the standard intact, although it is too early to say for sure what will happen.
"Uncertainty makes me ask a lot of questions," Anderson said. "Uncertainty means, are we going to be able to get a product we need to blend? Are we going to be able to get product at a competitive price? Is product going to become scarce? Are we going to be raising the cost of blending biofuel? If that's the case, will it raise costs for consumers? Ultimately, that's what uncertainty does."