NEW YORK (Reuters) - U.S. lawmakers from states that produce corn for ethanol plants said on Wednesday they would consider proposals from Senator Ted Cruz of Texas to help the oil refining industry cope with the nation’s biofuels regulation, but would never agree on anything that diminishes the program.
The price of U.S. renewable fuel credits sunk to their lowest levels in two months amid ongoing efforts by President Donald Trump’s administration to mediate talks between the rival oil and corn industries over the Renewable Fuels Program.
Representatives of both sides gathered on Wednesday at the White House and it was agreed that Cruz would circulate proposals to corn-state lawmakers in the weeks ahead that could help oil refining companies meet the RFS, according to the offices of Iowa Republican Senators Chuck Grassley and Joni Ernst.
The RFS requires refiners to blend increasing amounts of biofuels like corn-based ethanol into the fuel supply every year, a burden the refining industry says now costs it hundreds of millions of dollars every year and threatens to put some refineries out of business.
Cruz and senators from other states with refineries had asked the White House in a meeting last week to help bring corn state interests to the negotiating table to help find a solution.
The discussions have fueled speculation that the two sides could come up with a way to help refiners deal with the costs of compliance credits under the program without undermining the interests of the ethanol industry.
“The integrity of the RFS is Senator Grassley’s priority and there was an understanding expressed broadly in the meeting that any outcome can’t undermine the integrity of the RFS,” Grassley spokesman Michael Zona said.
“While we are happy to review any proposals Senator Cruz offers in the time ahead, we remain firm that our top priority in these meetings is ensuring that the spirit and the letter of the RFS is supported as intended by Congress,” Ernst spokeswoman Leigh Claffey said.
The meeting on Wednesday included staff from the offices of Cruz and Republican Pat Toomey of Pennsylvania, both representing the oil-refining industry. On the corn side, staff attended from the offices of Grassley, Ernst and Deb Fischer of Nebraska. Officials from the White House, the U.S. Environmental Protection Agency and the U.S. Department of Agriculture also attended.
Prices of renewable fuel (D6) credits were traded at roughly 74 cents on Wednesday, its lowest levels since early October, according to traders and Oil Price Information Service. The credits were trading at 90 cents each at the end of November.
Traders also cited some unexpected selling by small refiners that were granted waivers from the program by the U.S. Environmental Protection Agency.
“The small refiners were bringing the price down, but the talks in DC really added fuel to the sell off,” a trader said.
The RFS was introduced more than a decade ago by former President George W. Bush as a way to boost U.S. agriculture, slash energy imports and cut emissions, and it has since fostered a market for ethanol amounting to 15 billion gallons a year.
Refining companies - like Philadelphia Energy Solutions and Monroe Energy, both of Pennsylvania, along with Valero Energy Corp in Texas - that do not have adequate facilities to blend biofuels into their products are required to purchase blending credits called RINs from rivals that do.
They have pressed the administration to adopt reforms that would lower the credit costs, but the ethanol industry has successfully defeated those efforts.
Reporting by Jarrett Renshaw; Editing by Diane Craft and Lisa Shumaker