A recent report from the Department of Energy’s Energy Information Administration shows that net income for oil and gas companies hit a five-year high last year — in stark contrast to claims of “hardship” oil giants have used to skirt America’s biofuel laws.
According to the report, “2018 was the most profitable year for these U.S. oil producers since 2013, despite crude oil prices that were lower in 2018 than in 2013 on an annual average basis.” On a cost per barrel of oil equivalent (BOE) basis, “expenses for these 43 companies averaged $48/BOE in 2018, the lowest amount from 2013 to 2018.”
So with costs down and profits up, it’s hard to imagine how multibillion-dollar oil corporations like Exxon Mobil and Chevron were able to claim “disproportionate economic hardship”— a prerequisite for their refineries to secure special exemptions from the U.S. Environmental Protection Agency (EPA). Exemptions in hand, these refiners were permitted to replace 2.6 billion gallons of homegrown biofuels with more petroleum. And while media reports have uncovered the names of several recipients, most remain hidden behind a bureaucratic smokescreen, despite EPA promises to increase transparency.
Worse, it’s hard-pressed rural families who are paying the price for these record profits. U.S. ethanol consumption recently fell for the first time in 20 years. Across the heartland, many biofuel plants have shut their doors or idled production. Farm income plummeted $11.8 billion over just the last three months, the steepest drop since 2016.
That’s why Growth Energy is working closely with our rural champions in Congress to restore integrity to the process. In fact, Growth Energy members recently returned home from our second fly-in of the year, after meeting with over 80 lawmakers and their staffs on Capitol Hill.
With our support, U.S. Reps. Cindy Axne (D-Iowa) and Adrian Smith (R-Neb.) led a group of 35 members of the U.S. House of Representatives who sent a letter to EPA requesting the agency end the practice of granting small refinery exemptions for large or unqualified refineries and uphold the Renewable Fuel Standard.
“This unprecedented rate of granting waivers is a betrayal of our rural communities, detrimental to our energy security, and threatens our entire agricultural sector at a time of declining incomes and rising debts for our producers. EPA must halt this process and reallocate waived gallons as the law intends,” the representatives wrote.
Shortly after the letter, press reports revealed that EPA had made it easier for well-connected refiners to claim special exemptions long before the court decisions agency leaders had used to justify their actions. It was undeniable proof that the massive biofuel demand destruction undertaken by EPA had nothing to do with the law and everything to do with boosting profits for some of the world’s largest oil companies.
Sen. Chuck Grassley (R-Iowa) immediately spoke up, announcing, “EPA repeatedly told Congress its hands were tied and blamed the courts. That appears to have been a lie. EPA also said it was following Department of Energy recommendations. We also know that’s bunk. I’m going to get to the bottom of this.”
He is not alone. On the other side of the aisle, Sen. Tammy Duckworth (D-Ill.) penned a letter to the EPA Office of Inspector General. “This deception by EPA political appointees may indicate improper motives and conflicts of interest and it warrants a thorough review by the EPA OIG,” she wrote.
And on May 23, Chairman of the U.S. House Committee on Agriculture Collin Peterson (D-Minn.) along with Reps. Dusty Johnson (R-S.D.), Dave Loebsack (D-Iowa), Rodney Davis (R-Ill.) and Roger Marshall (R-Kan.) introduced the bipartisan Renewable Fuel Standard Integrity Act of 2019, which would bring much-needed transparency to the secretive exemption process.
It’s clear that leaders in Washington are taking notice. We will not allow these exemptions to get lost in the noise while rural communities suffer. Because the numbers are clear. The “economic hardship” is happening in America’s farm belt — not in oil company boardrooms. It’s time for EPA to fulfill the president’s promises to rural America and restore the market promised to America’s biofuel producers.
