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Refinery waivers adding US ag anxiety: Perdue

11 Apr 2018 18:50 (+01:00 GMT)
Refinery waivers adding US ag anxiety: Perdue

Houston, 11 April (Argus) — A sharp increase in exemptions to federal renewable fuel blending mandates was destroying agriculture demand and adding to rural economic anxiety, US agriculture secretary Sonny Perdue told senators today.

A record number of small refineries received Environmental Protection Agency (EPA) waivers to 2016 and 2017 requirements under the Renewable Fuel Standard (RFS), reducing the total physical volume of renewable fuels that must blend into the US fuel supply for this year.

Such waivers add pressure to corn and soybean farmers already nervous about trade battles between the US and China, Perdue told the Senate appropriations subcommittee responsible for omnibus farm legislation.

"That is demand destruction," Perdue said of the waivers. "Along with the trade dispute anxiety right now, it is having a cumulative effect over our producers and their financiers and bankers and others in the whole supply chain of agriculture."

RFS requires refiners, importers and other companies ensure each year that minimum volumes of renewables blend into the fuel that they add to the US transportation supply. Companies acquire renewable identification numbers (RINs) associated with that blending to prove compliance with the law. Obligated parties that do not physically blend fuel purchase RINs from others.

Congress allowed hardship waivers for refineries smaller than 75,000 b/d of crude capacity. EPA has confirmed at least 25 recipients for 2017, the most recent compliance year, up from 14 last year and 13 issued for the 2011 and 2012 compliance years combined.

Waived requirements allow the refineries to sell or store RINs associated with that compliance, increasing the supply available for other obligated parties. The waived obligations do not spread across the remaining companies.

Farmers already face lower commodity prices, Perdue said. Concern over the RFS and trade arguments have overshadowed the farm bill, a massive collection of legislation governing food, crop insurance and myriad other rural programs reconsidered every four to six years.

"The president has assured me and I have tried to assure our constituency out there that we are not going to ask farmers to bear the brunt and be the casualties in a trade dispute war," Perdue said. "They are patriots first, but when their livelihoods and futures are exposed, as they are now, there is considerable anxiety about that."