From a subscriber:

"I asked my local Cenex manager why the price of E85 was still high. E10 has dropped 43 cents in the last couple of months and E85 hasn't changed from $1.94. He told me that the RIN price has often been close to 60 cents but now is only 9 cents. So that is all they can do to adjust the price of fuel. Thank you, Mr. Pruitt. I have a flex fuel pickup and the price needs to be 60 cents difference for E85 to work. Our Cenex has blender pumps, so now I only use E30. I have a 2010 Acadia that is not flex fuel and have been using E30 for the last couple of years. No problems and it gets the same mileage on E30 as on E10. A question I have about the RIN waivers is, how long are they effective? One year at a time? Renewable? Permanent? Thank you."

My answer:

When RINs were selling for 60 cents to $1 a gallon, refiners blended ethanol. When they are 9 cents gallon they buy RINS to fulfill their RFS obligation and forget about blending ethanol. It was Ted Cruz's objective to reduce the price of RINs to a dime and he has succeeded. The issuance by EPA of 2.25 billion gallons of RIN waivers to "small" refiners absolved them of the obligation to blend ethanol or buy RINs. This significantly lowered the demand for RINs and therefore the price of RINs. Scott Pruitt's replacement, Andrew Wheeler, announced that they may grant waivers to 15 more refineries. This has produced cheap RINs so they buy those rather than blend ethanol. That is why the price of ethanol has recently hit a 13-year low. The national blend rate has declined and ethanol stocks have grown so the price weakens and ethanol margins are terrible. Thank you President Donald Trump.

Pruitt's intention was to undermine the enforcement mechanism of the RFS and he has succeeded. Grassley got treated like an Iowa hick by both Pruitt and Trump. We have cheap corn and ethanol companies should be adding value to it but instead they are struggling to make ends meet as they are being taken to the cleaners. When the Trump administration said they were going to deregulate agriculture, what they meant was that they were going to undermine the RFS. Remember Carl Icahn was Trump's first deregulation advisor and he owned a refinery. He recommended that Pruitt get the job at EPA and then Pruitt gave Icahn a RIN waiver. How was that for draining the swamp? Trump used the Branstad's to paint himself as a strong ethanol backer when what he has done is stab ethanol in the back. Yet many in commodity leadership and ethanol associations have remained quiet ... because they are republicans who put their party ahead of their industry?

It is great that you took my advice on E30. I filled up for $1.99 a gallon recently and as you and I know, the idea that you cannot use it without a flex fuel vehicle is bunk. I put over 200,000 miles on my last pickup using E30 and am starting right out using E30 in my new one. Approving E15 for summer use will come no-where close to offsetting the damage being done to the RFS by the issuance of RIN waivers.

FAPRI says that if the EPA continues its practice of approving RIN waivers to small refineries that over the next six years we will lose 4.6 billion gallons of ethanol consumption costing the industry $20 billion. The RFS mandates 15 billion gallons of ethanol be blended annually under RIN enforcement but also according to the FAPRI study that total gets watered down each year by 761 mln gallons on average from 2018-23 because of RIN waivers. FAPRI had forecast that RINs would average 64 cents but as a result of the RIN waivers, they revised that to 10 cents for 2018-23. Given cheap RINs less ethanol will be blended. We are seeing the ethanol blend rate decline as well as much less favorable pricing for ethanol. Ethanol margins have shrunk as a result when they should have been good. Real damage is being done. Most in the ethanol industry initially got on board the Trump train sold on Trump by the Branstads. They expected good things from Trump who had expressed strong support for the industry. He has instead backed the train over them which must be cause for celebration by the petroleum industry. U.S. Sens. Chuck Grassley and Joni Ernst did not stop this from happening, conveniently blaming it all on Pruitt and not on his boss. Whoever gets the blame it happened and is serious.

Grassley thinks that diluting the RFS with RIN waivers was just step one of a comprehensive plan "by EPA to systematically undermine the RFS, and if the reports are accurate, may now use the weakened state to justify gutting the biofuels program further."

The EPA wants to do a reset of the RFS in a new rule making process in January, where they lower the applicable feedstock target to account for the RIN waivers. Due to the RIN waivers, the ethanol target will not be met so they argue that allows the EPA to reset it reducing it. Instead of a 15 billion gallon corn feedstock target they may reduce it to 14.24 billion gallons for example. When I said that Trump appointed a fox to guard the RFS henhouse and that the result would be dead chickens the response was "No ... Trump won't allow that because he strongly supports ethanol." Have you figured out that I was dead right and Trump is overseeing the destruction of the RFS? This is the administration's plan to “gut” the RFS ... a word that Grassley used.