New E15 push expected from White House: Update

Adds RIN price context.

President Donald Trump's administration will within weeks renew efforts to allow the year-round sale of higher-ethanol gasoline blends, according to multiple sources in biofuels and refining industries.

The administration will announce changes to allow the year-round sale of 15pc ethanol gasoline in October, according to sources familiar with the plan but not authorized to discuss it publicly. Exactly what they would offer US refiners and importers to support the change remained unclear and under discussion today. Strategies for quick approval of the change risk an almost certain court challenge.

Neither the White House nor the Environmental Protection Agency (EPA), which administers the fuel regulations, responded to questions about the plan.

US air quality laws restrict gasoline's Reid Vapor Pressure (RVP) — a measure of how easily the fuel evaporates — in certain markets during high-demand summer months. The law included a specific waiver for gasoline with up to 10pc blends of ethanol.

Ethanol groups seeking greater market share have demanded EPA expand that waiver to 15pc blends.

Approving the waiver could ease some of the farm-country displeasure with Trump administration trade actions ahead of fall elections. Battles with China have cut off major soy and corn markets for US farmers. Agribusiness and renewable fuels companies have pushed the administration, rather than Congress, to make the change.

Refiners have said they would support a change — as a package with changes that reduce their costs or obligations under the program.

But industry representatives have repeatedly warned that any unilateral change to the waiver would head to court. Critics of the environmental consequences of the change, including US senators Peter Welch (D-Vermont) and Tom Udall (D-New Mexico) also warned that the EPA could not make such a change.

"Previously, EPA has publicly concluded that it does not have the statutory authority to issue such a waiver, and the reported decision to reverse this conclusion appears to be driven by political considerations, rather than scientific or legal analysis," the senators said in July. "The plain reading of the Clean Air Act and EPA's long-standing interpretation strongly suggest that EPA lacks authority to unilaterally allow year-round sales of E15."

Agriculture supporters carefully targeted Pruitt, not Trump, in this year's push for the waiver. Senators and trade groups singled out the increasingly embattled administrator, casting him as interfering with presidential directions drawn from occasional Trump comments in support of the policy this year. But acting administrator Andrew Wheeler has not moved on the proposal since assuming EPA leadership in July. Agriculture secretary Sonny Perdue told farmers in Iowa last month that Trump supported the change as part of a larger fuel sector bargain.

Increasing fuel blending would increase the number of available renewable identification numbers (RINs) needed to comply with federal fuel blending mandates called the Renewable Fuel Standard. The risk of more RINs has helped to pressure already-low prices for the credits lower. RINs associated with ethanol blending fell by 8pc to 14.5¢/RIN today, the lowest settlement since late January 2013, based on Argus assessments.