Grassley asks White House for biofuel support as SPR fill helps oil industry

Washington — US Senator Chuck Grassley, Republican-Iowa, urged the Trump administration Thursday to help the US biofuel industry weather plunging fuel prices and demand, just as the White House was seen as supporting domestic oil producers by filling up the government's emergency crude stockpile.

"Fuel consumption has been slashed due to coronavirus & that has hurt energy jobs including ethanol + biodiesel plants in Iowa," Grassley tweeted. "If something is done to help oil, there needs to be something for biofuels workers. It's a matter of fairness."

The Energy Department announced earlier Thursday that it was seeking to buy an initial 30 million barrels of US crude as part of Trump's pledge to fill the Strategic Petroleum Reserve.

Energy Secretary Dan Brouillette pushed back on the idea that the SPR purchases were designed to be as an economic stimulus for US oil producers, who are getting hammered by historic low prices caused by plummeting coronavirus demand and the breakdown of OPEC+ supply cooperation.

Brouillette said buying the 77 million barrels of crude needed to fill the SPR made common sense while oil prices are at historic lows.

US oil demand continues to spiral down as people stay home to avoid spreading coronavirus, and so too does demand for ethanol blending into gasoline.

Ethanol margins have sunk further below zero, meaning many ethanol plants are losing money on every gallon of the biofuel they produce. And with ethanol prices far exceeding those of gasoline, blenders will lose any incentive to blend more than just the ethanol volumes required under the Renewable Fuel Standard.

While few plants have closed so far, market observers expect that many such closures are inevitable.