Oil industry rift sets roadblock for year-round E15

The latest failed attempt to expand ethanol’s share of the U.S. gas tank is putting divisions within the petroleum oil industry on full display.  

The rift came to a head after a deal among farming, biofuel and oil industry representatives on ethanol legislation fell apart in Congress. A bill to allow year-round, nationwide sales of higher corn ethanol blends, known as E15, was expected to be included in a funding measure that must pass Congress by Jan. 31 to avoid a government shutdown.  

But that didn’t happen amid fierce opposition from small, independent refiners over a provision to reduce the number of refiners eligible for exemption from the Renewable Fuel Standard (RFS), the law that established a mandate for blending a certain level of biofuels into the nation’s annual fuel supply. Corn farmers directed their anger squarely at lawmakers and weren’t impressed with the creation of a congressional task force, dubbed the Rural Energy Council, to study E15 and craft legislation to be voted on in late February.  

Ahead of President Donald Trump’s visit to Iowa on Tuesday, top biofuel and corn groups in the state ran a full-page ad in the Des Moines Register addressed at the president: “In Iowa, the intersection of economy and energy occurs at a place called E15.”  

“Farmers need markets, not bailouts,” the ad said. 

Trump’s E15 comments in Iowa garnered praise from the National Corn Growers Association. “The president sounds like he’s committed to signing E15 legislation into law, and we are here for it,” the group said in an emailed statement.  

API deal exposed oil industry rift

In a move unthinkable about five years ago, the American Petroleum Institute (API) joined ethanol groups in calling on Congress to move quickly to pass the revised E15 legislation proposed earlier this month.  API, which represents large refiners, and biofuel producers are increasingly aligned as the rise of electric vehicles threatens the future of liquid fuels.  

In contrast, the Fueling American Jobs Coalition, a group of union workers and independent oil refiners seeking to overhaul “flawed” biofuel regulations, praised members of Congress for resisting political pressure and not moving forward with the E15 measure. 

Sen. Deb Fischer, R-Neb. (Official photo)

“We stand ready to engage with the Rural Energy Council to pursue a responsible path forward that supports ethanol producers without risking higher fuel costs for American households, lost  jobs, or weakened U.S. energy security,” the coalition said.  

“We worked with API in order to get a compromise. We saw oil-on-oil violence take place then with big oil against small refineries,” Sen. Deb Fischer, R-Neb., who has sponsored E15 legislation for the last decade, told Agri-Pulse Tuesday evening.  

But Fischer expressed optimism that Congress should be able to come to a “good resolution” on E15.

For now, the major sticking point boils down to disagreement between big and small energy firms over so-called small refinery exemptions (SREs) from yearly biofuel-bending requirements.  

The RFS currently allows refineries with an average of under 75,000 barrels per day (bpd) of crude oil to seek temporary relief through the Environmental Protection Agency. The proposed E15 legislation would change the threshold to 75,000 bpd across all operations, as opposed to an individual refinery.  

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Under recent draft legislation, refiners with single plants below 75,000 bpd of crude oil but bigger than that overall include Suncor Energy, with refineries in Commerce City, Colorado, according to 2025 U.S. Energy Department data.  

Other refiners facing potential issues include HF Sinclair refineries in Wyoming, Utah and Tulsa, Oklahoma; Calumet in Louisiana and Montana; Marathon Petroleum in North Dakota, Salt Lake City and Alaska; CVR Energy in Oklahoma; Phillips 66 in Montana; and Valero in California.  

Independent refiners contend that larger rivals support stricter SRE rules as part of a larger goal to consolidate the industry. API, which seeks “balanced reforms to the small refinery exemption program,” has said the current SRE process lacks adequate transparency and leads to market distortions.  

Biofuel groups have argued that some refiners seeking exemptions on the grounds of economic hardship don’t really need the regulatory relief.  

In October, the attorneys general of Iowa, South Dakota and Nebraska raised concerns with the Trump administration about requests for SREs, including the possibility of oil refineries artificially idling plants to satisfy the 75,000 barrels per day requirement and companies claiming economic hardship to EPA while also claiming strong financial performance to the Securities and Exchange Commission and shareholders.  

Earlier this month, Sen. Chuck Grassley, R-Iowa, asked EPA Administrator Lee Zeldin if the AGs have received a response, whether the concerns have been investigated and if EPA would take the concerns into consideration in future RFS rulemakings, including by cross-referencing filings with other federal agencies, such as the SEC.  

Trump tells Iowans deal 'very close,' but how close?

As Republicans try to hold onto their control of Congress after this year’s midterm elections, Trump on Tuesday made a campaign stop in Iowa, the biggest U.S. producer of ethanol and the corn used to make it.  

Trump got a huge roar of applause after reminding the crowd in Iowa that he promised in his presidential campaign to support E15. The president, who frequently talks about his love both for farmers and the oil industry, said he’s trusting House Speaker Mike Johnson, R-La., and Senate Majority Leader John Thune, R-S.D., “to find a deal that works” for farmers, consumers and oil companies, including small and mid-sized refiners.  

Republican leaders “are working on it,” Trump said. “They’re very close to getting it done.”   

Trump’s comments drew cheers, though they come after some key Republicans urged the president to speak up to help get legislation passed. Grassley said last week the latest funding legislation may have been the best chance to pass E15 for the foreseeable future.  

Fischer on Tuesday said E15 passing the House and Senate as a standalone bill is unlikely and a larger legislative vehicle will be needed.  

Meanwhile, the American Soybean Association (ASA) on Monday expressed alarm about the new E15 council’s leeway to review a broad range of biofuel policies, including those critical to supporting U.S. markets for soybeans, the ag group said.