The White House has asked the Environmental Protection Agency (EPA) to allow small oil refineries to blend less biofuels into their gasoline and diesel than initially projected. This move is part of the administration's broader effort to alleviate high pump prices for consumers. Refiners are legally mandated to blend billions of gallons of biofuels or purchase renewable blending credits (RINs); however, smaller plants can apply for waivers if they can demonstrate financial hardship. The EPA is currently reviewing 34 such waiver requests.
Bloomberg Intelligence analyst Brett Gibbs anticipates that by the end of August, the EPA will issue 2025 Small Refinery Exemptions (SREs) exceeding 1.8 billion RINs, a significant increase from the initially indicated 991 million RINs. This level of exemptions would be the highest since 2017. If these exemptions are granted, almost all of the impact would fall on biomass-based diesel, particularly biodiesel, which could severely harm the biodiesel industry, composed largely of small businesses and farmers.
Agricultural and biofuel groups have strongly criticized this potential action, warning President Trump against increasing SREs. They argue that reducing blending volumes through SREs would undermine the record-high 2026-27 biofuel-blending quotas finalized by the EPA in March. These groups, including Bunge Global, POET, Clean Fuels Alliance America, and the American Soybean Association, claim that such exemptions would destroy biofuel demand, negatively impact the rural economy, and not genuinely reduce fuel costs for drivers. They assert that RIN prices do not drive gas prices, citing past instances where high RIN prices did not correlate with increased gas prices.
Conversely, groups like the Fueling American Jobs Coalition, representing union workers and independent oil refiners, contend that the EPA's final Renewable Volume Obligations (RVOs) have driven RIN prices higher, adding over $0.30 per gallon to fuel costs. They also argue that the domestic biofuel industry is not currently capable of producing enough fuel to meet next year's mandate. However, agricultural companies and biofuel advocates counter that previous high SRE levels resulted in a $6.4 billion loss for the biofuel industry, a collapse in renewable fuel credits by up to 78%, and a 12% increase in gas prices.
Increased investments in crush capacity, renewable diesel, and sustainable aviation fuel infrastructure have been made by more than a dozen companies since the finalization of the 2026-27 RVOs, directly citing RFS policy as the catalyst. The U.S. soybean processing industry, for example, has invested over $7 billion to expand crushing capacity by more than 25%. The EPA estimates that the 2026 RVO will generate $31 billion in value for American corn and soybean oil, and the USDA projects a $3 billion to $4 billion increase in net farm income, supporting over 100,000 new agricultural and manufacturing jobs. The American Soybean Association estimates that excessive RFS exemptions could lead to a $1 billion loss for soy farmers and destroy approximately 500 million gallons of biomass-based diesel demand, potentially causing a renewed slump in soybean prices.
