Governors of Louisiana, Alabama and Texas asked the EPA to waive the mandatory biofuel blending for 2027, arguing that it makes fuels more expensive. The agribusiness and biofuel sector rejected the proposal and warned that it would reduce demand for corn and soybeans and push prices higher.
The governors of Louisiana and Alabama asked the Environmental Protection Agency (EPA) to partially waive the Renewable Fuel Standard (RFS) blending levels for 2027, arguing that those mandates make gasoline and diesel more expensive. After filing the request, the officials urged the governors of Texas, Mississippi and Arkansas to join; so far, the only one to sign on was Texas Governor Greg Abbott.
"Americans are paying more for gas and diesel because of the Renewable Fuel Standard (RFS). Meanwhile Europe pays zero for the American gas and diesel, and they export it! Time to put American drivers FIRST," Louisiana Governor Jeff Landry, a Republican, posted on social media. In a letter addressed to Lee Zeldin, EPA administrator, the governors argued that the 2027 biofuel rules "would severely harm" the economies of Louisiana and Alabama, as well as the Southeast region.
Groups representing biofuel producers and farmers flatly rejected Landry's proposal. "Any suggestion that ethanol blending compelled by the RFS is somehow raising gas prices is abjectly absurd and demonstrably false," said Geoff Cooper, CEO of the Renewable Fuels Association. "Far from delivering 'relief' at the pump, a waiver of the 2027 RFS requirements would remove a dependable source of lower-cost, lower-carbon fuel from the marketplace and cause higher gas prices," he added.
The American Soybean Association (ASA) recalled that "the national average cost of biofuel blends is lower than that of conventional petroleum-derived fuels," so the requests are not grounded in economic reasonableness but in defending the oil industry's interests. "Make no mistake: undercutting the RFS by waiving compliance would result in a giveaway to refineries that are making record profits while U.S. agriculture would be left holding the bag," the association said.
ASA noted that "U.S. oil and gas companies have made a record $160 billion in profits since April, an increase of more than 175% compared to last year," while "American farmers are struggling to keep their farms and cannot afford another market loss." Along the same lines, Emily Skor, CEO of Growth Energy, warned that "if EPA were to grant these states the special treatment they're asking for, it would increase fuel prices — not lower them — by reducing the amount of ethanol being blended into America's fuel supply."
For Monte Shaw, executive director of the Iowa Renewable Fuels Association, the real solution to lowering fuel prices is to boost domestic supply through congressional passage of legislation allowing year-round voluntary sales of E15, a blend with a higher ethanol share than the national standard of about 10%. University of Illinois professor Scott Irwin said he was "very surprised" that both states had invoked "severe economic harm" as a justification: "That is a very high bar to meet, and the EPA has never approved a previous waiver request based on that justification. By my count, the record is a perfect 0-4."
The request comes after the EPA, on August 31, exempted 29 refineries from complying with the mandatory blending of biodiesel with diesel and bioethanol with gasoline: 18 received 100% exemptions and 11 received 50% exemptions, which meant the cancellation of a total of 1.76 billion RINs for compliance with the mandate corresponding to 2025.
That ruling is equivalent to 13.4 billion gallons of gasoline and diesel, a figure representing 7.5% of the annual supply of both fuels in the United States. The measure had a direct bearish impact on soybean oil and, to a lesser extent, on U.S. corn. On October 13, the EPA announced revisions, asserting that the committed volumes would be maintained by being relocated 100% in later years, although that announcement did not have a major impact on CME Group soybean oil quotations, which remained under downward pressure and only reversed the trend in the last few sessions.
The debate takes place after the midterm elections, in which Democrats won control of the House of Representatives and the Senate with messages focused on restoring affordability amid high prices for fuel and other products. Separately, some energy lobbyists believe those victories could encourage certain environmental groups to harden their opposition to liquid biofuels.
On Monday, members of the United Steelworkers union gathered at the Capitol to urge lawmakers to reform the RFS, arguing that rising compliance costs put upward pressure on fuel prices and put U.S. jobs at risk. "The midterm elections have put affordability front and center, and for working families, few costs are more visible than the price of gas," said Roy Houseman, USW legislative director.
