NEW YORK, Sept 28 (Reuters) - The largest U.S. oil trade association urged President Donald Trump on Friday to halt any plans to lift a ban on summer sales of higher ethanol blends of gasoline and impose tighter trading restrictions on biofuel credits, saying such a move would be unfair to consumers.
The opposition by the American Petroleum Institute (API) means Trump would need to disappoint a key energy constituency in order to move forward with the plan to help Midwestern farmers by expanding sales of corn-based ethanol ahead of November’s congressional elections.
Trump has repeatedly said he wants a win-win solution to the nation’s controversial biofuels policy, which has support from both the rival corn and oil industries.
“This so-called deal does nothing to fix the program ... it makes things worse,” API Director Frank Macchiarola said on Friday. “It is giving away the store to the ethanol lobby and giving the consumers the tab.”
The API, which is concerned that expanding ethanol sales would cut into its market share, believes as many as 75 percent of U.S. cars are incompatible with so-called E15 gasoline and risk losing their warranty if it is put into the gas tank, Macchiarola said.
The Renewable Fuel Association disputes the API figure, saying in a tweet that 90 percent of cars in the United States can safely use E15.
As part of the E15 deal, the White House is considering imposing restrictions on trading of biofuel credits in an effort to discourage speculation and reduce costs for oil refiners to comply with U.S. biofuels policy, Reuters reported.
The U.S. Renewable Fuel Standard requires refiners to blend increasing amounts of biofuels like ethanol into the fuel pool each year, or buy credits from competitors who do. Refining companies that must buy the credits have complained about volatile prices in recent years.
The trade restrictions would include capping the number of credits a dealer can hold at 120 percent of their company’s annual compliance obligation and potentially also restricting certain parties from holding the credits for more than 30 days.
Macchiarola said such restrictions would hurt liquidity in the RIN market and do more harm than good.
Biofuel credit prices were near five-year highs last year, but have dropped sharply to their lowest since 2013, due mainly to the EPA’s expanded use of waivers freeing small refiners from their obligations. (Reporting By Jarrett Renshaw Editing by Bill Trott)