Refiners Warn New US Biofuel Rules Could Fuel Iran Conflict Prices
Trump Administration Mandates Increased Biofuel Blending
The Trump administration has directed U.S. refiners to increase the amount of biofuels blended into gasoline and diesel for this year and next, a decision that has sparked concerns from the refining industry about rising fuel prices. This move comes at a time when pump prices are already climbing due to tensions in Iran.
This directive has revealed an unusual public disagreement between the White House and oil companies, which have typically supported efforts to strengthen the fossil fuel energy sector. Chet Thompson, president and CEO of the American Fuel & Petrochemical Manufacturers (AFPM), criticized the Environmental Protection Agency (EPA) for finalizing a rule that could worsen the situation for consumers.
“It’s baffling, with fuel prices already rising due to the conflict in Iran, that EPA is finalizing a rule that will make things far worse for consumers,” Thompson said. “This is not what energy dominance looks like.”
Support from Agricultural Sectors
Despite the concerns from the refining industry, the new biofuel mandates have been welcomed by farmers and biofuel producers. The U.S. Renewable Fuel Standard requires oil refiners to blend billions of gallons of corn-based ethanol and other biofuels into the nation’s fuel supply each year or purchase tradable credits known as RINs.
A RIN corresponds to one gallon of biofuel blended. Farmers and biofuel producers see the program as essential for supporting rural economies, while refiners view it as a costly burden.
The EPA recently set the 2026 biofuel obligations at 26.81 billion RINs and 27.02 billion RINs for 2027. These figures include 70% of around 2 billion gallons that had been waived in 2023-2025 under a program allowing exemptions for small refiners.
These numbers are significantly higher than initially proposed. In June 2025, the EPA had suggested total biofuel blending obligations at 24.02 billion RINs in 2026 and 24.46 billion RINs in 2027, without specifying how much of the previously waived volumes should be reallocated.
The National Corn Growers Association praised the announcement, along with the Trump administration’s earlier decision to expand the seasonal availability of gasoline with 15% ethanol. They believe this will benefit farmers facing challenging economic conditions.
“Today’s announcement, coupled with the Trump administration’s E15 summertime waiver earlier this week, is a positive move for the nation’s corn growers who are navigating an exceptionally difficult economic environment,” the group stated.
However, the Renewable Fuels Association, which represents ethanol producers, expressed disappointment that only 70% of the waived volumes were reallocated, rather than 100%.
Impact on Consumer Prices
Thompson of AFPM argued that existing biofuels mandates have already increased consumer pump prices by 25 cents per gallon, and the new mandates would further raise them. A gallon of regular gasoline in the U.S. now costs about $3.98 on average, up more than a dollar since the start of the war on Iran on February 28. Diesel prices have also risen sharply.
This surge in energy prices presents a political challenge for Trump and his Republican party ahead of the November midterm elections.
The requirement to blend biofuels into the nation’s fuel pool was introduced around two decades ago as a strategy to reduce U.S. reliance on imported fuel and support farmers.
In addition, the EPA announced that starting in 2028, foreign fuels and feedstocks will receive only half the RINs of American-made products, a measure intended to bolster the domestic biofuel industry.
