Trump's Iowa Visit Jolts Biofuel Credits as Waivers May Decline

(Bloomberg) -- The aftershocks of President Donald Trump’s visit to Iowa this month are reverberating in the market for biofuel credits on speculation that American farmers have gained ground in a battle over mandate compliance.

Prices for Renewable Identification Numbers, or RINs, the credits used by refiners to show compliance with the biofuel mandate, have increased more than 40% since June 10. That’s the day before Trump visited the Southwest Iowa Renewable Energy LLC plant in Council Bluffs, Iowa. While thanking the president for following through on a promise to allow for year-round higher sales of corn-based ethanol, farmers and biofuel producers prodded him to rein in the administration’s granting of exemptions to small oil refineries for adhering to the biofuel-blending regulation.

RINs tracking 2019 ethanol consumption targets climbed to 20.5 cents on Thursday from 14.25 cents on June 10. On a percentage basis, that’s more than six times the advance in crude oil prices over the same period. Crude jumped as tensions between the U.S. and Iran escalate.

In the past week, there haven’t been large apparent moves in blending or production that would appear to justify a big percentage change in RIN prices, despite ample supply, signaling the price move is related to the mandate debate.

Waivers the Environmental Protection Agency has been issuing on compliance with the Renewable Fuel Standard pit two factions of Trump’s political base -- farmers and oil companies -- against each other as the 2020 presidential election approaches.

Farmers have taken the fight into the public sphere. At the Iowa event in Council Bluffs, one farmer, speaking on stage just inches from the president, urged Trump to curb the waivers. Meanwhile, the National Corn Growers Association has launched an advertising campaign on Trump’s favorite television news source to step up pressure on the administration. The ad, airing on Fox News in Washington, calls on the EPA to halt “special favors to oil companies” and “stop betraying President Trump’s commitment to farmers.”

In finalizing its 2019 renewable fuel consumption targets in December, the EPA estimated that there were 2.59 billion RINs in the so-called RIN bank. The EPA is reviewing 39 refineries’ applications for exemptions for 2018 blending requirements. In 2017, the agency granted 35, with one application still under review.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net;Jennifer A. Dlouhy in Washington at jdlouhy1@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi, Christine Buurma

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