Opinion: Higher biofuel mandates would hit refining communities hardest

Chet Thompson

Environmental Protection Agency officials gather in Ypsilanti Wednesday for a public hearing on increasing the requirements to blend biofuel into the nation’s fuel supply.

Costly and unworkable federal biofuel blending mandates have burdened refineries in Michigan, the Midwest and across the nation for more than a decade. As the administration now considers forcing biofuel requirements even higher, the objections of refining communities and American drivers who would be hardest hit by this misconceived proposal must be heard.

The proposed increase is part of a Trump administration effort to help domestic biofuel producers and farmers recover from falling exports due to the ongoing trade war and other shifts in foreign demand. But these trade issues would be better addressed through trade policy — not by attempting to force more ethanol into the U.S. fuel market than it can handle.

Government data show U.S. ethanol consumption already nears record highs, and infrastructure constraints combined with lacking consumer demand for higher-ethanol blends (like E15 and E85) mean our fuel system is maxed out with ethanol. Estimates show that higher biofuel mandates would only be met with more biodiesel — which raises prices for U.S. consumers and benefits foreign producers, as greater biodiesel mandates would be met with imported supply.

Here at home, the proposed biofuels hike threatens refineries with higher compliance costs and puts jobs at risk. Some facilities already spend more on biofuel mandate compliance than they do on employee payroll. Refineries have long provided high-quality jobs and served as economic anchors in manufacturing communities. In Michigan alone, that means almost 7,000 refinery jobs and jobs that support refineries and their workers. Nationwide, refiners support nearly 2.4 million jobs, including highly skilled workers across a number of trades. These jobs should not be needlessly put on the line.

Refining also fosters economic growth across the manufacturing belt in Michigan, Ohio and Pennsylvania, contributing approximately $49 billion to state economies and close to $3 billion in state, local and federal tax revenue. In Detroit, for example, Marathon Petroleum’s refinery is an integral part of the economy and has fueled the region’s auto industry for almost 90 years, helping to support thousands of manufacturing jobs.

Marathon Petroleum Corp. has idled two of its 16 refineries in North America,  but its Detroit facility continues to operate.

The companies, facilities and workers who live and thrive in refining communities are also making lasting contributions that go far beyond economics. In Michigan, this includes enhancing the state’s pristine beaches, forests and wetlands. Since 1976, the oil and natural gas industry has contributed more than $1.1 billion to the Michigan Natural Resources Trust Fund and the State Park Endowment Fund — funds that facilitate projects including the renovation of Belle Isle and the protection of wetlands throughout the state.

As the sector fueling American manufacturing and the economy, the U.S. refining industry continues to play a key role in the ongoing prosperity of our nation. We would be well-served to advance policies that keep this important sector strong and protect the millions of well-paying jobs it supports. 

Chet Thompson is president and CEO of the American Fuel & Petrochemical Manufacturers.