U.S. Oil Refining Trade Group Challenges Trump Biofuel, Tariff Policies in Letter

By Jarrett Renshaw and Stephanie Kelly

July 29 (Reuters) – A leading U.S. oil refining trade group has sent a letter to top Republican lawmakers criticizingPresident Donald Trump’s biofuel policies, the oil industry’s biggest rift with the president since his return to the White House in January.

The July 25 letter from the American Fuel and Petrochemical Manufacturers (AFPM), seen by Reuters, reflects a growing divide between U.S. oil producers and refiners over biofuels policy following an unsteady alliance over the issue in recent years.

In the letter, sent to U.S. House of Representatives Speaker Mike Johnson and Senate Republican leader John Thune, AFPM says it opposes efforts in the Congress to raise the standard for percentage of corn-based ethanol in gasoline to 15% from 10%.

The trade group had previously adopted a more neutral stance toward the issue in recent years.

U.S. refinery capacity has taken hits in recent years and two planned refinery closings in California will push U.S. refining capacity toward a new post-pandemic low of 17.8 million bpd.

The two-page letter also expressed opposition to the Environmental Protection Agency’s recent proposal to hike the overall volumes of biofuels that refiners must blend into U.S. fuel each year. The increase will add some $70 billion in compliance costs, the group said.

The policies will hurt “consumers, our members, and the President’s energy dominance agenda,” AFPM President Chet Thompson said in the letter.

Some in the industry view the letter as a needless poke at Trump, whose aggressive pro-oil agenda has made him a staunch and mercurial ally of Big Oil, according to two sources familiar with the matter.

Asked to comment for his story, an AFPM spokesperson said the group “has deep concerns with federal biofuel policy and the latest RFS proposal, especially. These are things we hope to address with the administration and Congress.”

Integrated oil majors like ExxonMobil XOM.N and Chevron CVX.N have used their large financial resources to invest in biofuel production while independent refiners like PBF Energy PBF.N and CVR Energy CVI.Nhave complained that farm-friendly pro-biofuels policy raised costs to onerous levels that threaten their plants.

AFPM’s list of grievances included the administration’s failure to exempt imported biofuel feedstocks from Trump’s tariffs, while imported oil and gasoline are exempt.

The letter criticized the EPA’s handling of waivers for small refiners from biofuel blending obligations and the EPA’s decision to allow temporary nationwide summertime sales of gasoline with a higher ethanol content.

“We understand support for some of these policies is intended to help promote the domestic agriculture and biofuel industries, for which the above are clearly designed. But these policies should not come at the expense of the domestic refining industry and U.S. consumers,” it read.

A wave of U.S. refinery closures in 2020 dropped national fuel capacity below 18 million-barrels-per-day (bpd) for the first time since 2014, but refinery expansions in the highly-concentrated Gulf region by ExxonMobil XOM.N, Marathon MRO.N and Citgo have helped bring back the lost capacity.

Still, two major upcoming closures in California are expected to deepen the decline.

Phillips 66’s 139,000 bpd refinery in Los Angeles is set to shut down by year-end and Valero’s 145,000 bpd refinery in Benicia is scheduled to close in early 2026.

(Reporting by Jarrett Renshaw and Stephanie Kelly; Editing by Chizu Nomiyama, Howard Goller and David Gregorio)