Oil Industry Asks U.S. EPA to Limit 2014 Renewable Quotas

The American Petroleum Institute asked the U.S. Environmental Protection Agency to reduce requirements in 2014 for the use of renewable fuels, citing limits on refiners to blend in greater volumes of ethanol.

The filing is the first by the Washington-based trade group, which represents companies such as Exxon Mobil Corp. (XOM) that produce and refine oil, and follows pressure to revise the program from lawmakers, corn consumers and anti-hunger advocates. While the EPA said last week it would cut the mandate for ethanol next year, it didn’t specify what the reductions would be or when they would be announced.

“EPA is sending the right signal for next year, but we need the certainty now,” Bob Greco, director of API’s downstream group, said in an interview. “What we need to do is hold EPA’s feet to the fire.”

Under the Renewable Fuel Standard, passed by Congress in 2007, refiners such as Exxon Mobil must use a certain amount of renewable fuels each year, with their contribution determined by their share of the fuel market. The EPA and renewable-fuel producers argue it both spurs production of domestic fuels and cuts greenhouse-gas emissions.

10% Blend

Refiners complain that declining demand for gasoline means that next year, under the current quota, they would be forced to blend in more than 10 percent of ethanol, which they say isn’t safe for all engines and lacks support from consumers. Lobbyists for refiners such as Valero Corp. (VLO) have pressed Congress to scrap the program altogether.

API asked the EPA to lower the quota so that ethanol use wouldn’t be pushed to greater than 10 percent of total fuel use, known as the “blendwall.”

“Unless EPA exercises its authority to waive the mandates, the ultimate and unavoidable outcome of the RFS-imposed ‘blendwall’ will be significant increases in the cost of fuel and substantial fuel supply shortages,” the refiners said in their petition. The EPA has 90 days to respond.

Supporters of the program say this petition is just an attempt by the oil industry to limit competition.

“It is time that oil companies and special interests stop worrying about maintaining their monopolistic practices and allow competition and choice in the marketplace,” Tom Buis, chief executive officer of Growth Energy, a group that represents ethanol producers, said in a statement.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Steve Geimann at sgeimann@bloomberg.net

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