AFPM sees alignment with Biden on trade, economy

Refining and petrochemical trade group American Fuel and Petrochemical Manufacturers (AFPM) will look for a new direction in trade leadership and US biofuel policy once president-elect Joe Biden takes office.

The Biden administration will bring a sharp reversal on the climate policies carried out by President Donald Trump, with priorities that will include greenhouse gas reduction targets and tougher permitting for US petroleum projects. Biden also campaigned on goals to increasingly electrify the US vehicle fleet and maintain support for renewable fuels, which would erode market share for the petroleum fuel that dominates AFPM membership's output.

But chief executive Chet Thompson expects to find common ground on immediate priorities of restoring confidence in the US response to the Covid-19 pandemic, the economy and a unified country.

"I am going to come at the new relationships with the desire to promote the fact that the world needs our stuff, the economy needs our stuff, and we are willing to work with you to find ways that we can do it with the least impact on the environment as we can," Thompson told Argus.

The US downstream group hopes to work with the Biden administration on easing years of foreign trade hostilities, including tariffs with China and regulatory obstacles for private energy investment in Mexico.

Mexico over the past six months curbed access to permits private companies need to import and export petroleum products in the largest foreign customer for US production. The decisions have snarled private investment in new marketing and midstream infrastructure there, and represent "putting a thumb on the scale against US assets down in Mexico," Thompson said.

Mexico's government in December added reporting requirements and reduced the lifespan of new permits to five years, down from 20.

President Andres Manuel Lopez Obrador wants to reduce Mexico's dependence on imports and restore Pemex strength following 2014 energy reforms that eliminated the state-owned company's monopoly.

"These issues have gotten real over the past six months, and they continue," Thompson said. "We hope the Biden administration can come in and shake things up a little bit."

Biden's administration will have considerable authority over the chief federal instrument for compelling a higher portion of liquid renewable fuels in the US transportation supply, the Renewable Fuel Standard. The Environmental Protection Agency (EPA) must this year set three years of blending mandates, including one left overdue by the Trump administration, and write a new framework for the primary US program used to drive higher levels of renewable fuels into the transportation fuel supply.

Biofuel fortunes under Trump were marked by reductions — in barriers to blending ethanol into the US gasoline supply, in the volumes of major overseas biodiesel production that could be imported, and in the mandates that drive the blending of those fuels each year.

The program was intended to force uncomfortable change on the prevailing petroleum-based fuel system. But the mandates as written more than a decade ago greatly exceeded anything the US could execute, and limited EPA's ability to change course so long as a supply of renewable fuels existed.

AFPM wants the review to set lower, attainable targets, Thompson said.

"We are not anti these alternative fuels — we are making them," Thompson said. "We just do not like when the government mandates what consumers must buy and what we must make."

It was a message similar to the group's support of a Trump administration rollback of vehicle fuel efficiency requirements last year. AFPM supports improved vehicle efficiency and greenhouse gas reduction, Thompson said. But the group would continue to oppose what it saw as subsidies or mandates for electric vehicles under the guise of other programs, Thompson said.

AFPM halted all political contributions last week after the 6 January attack on the US Capitol, pending a review of recipients and determination of "what role, if any, did the people that we contribute to play?" Thompson said.

Communication on downstream priorities would continue, including with US senator Ted Cruz (R-Texas), a staunch ally of both the US refining industry's regulatory efforts and Trump's effort to block certification of election results.

"We want everyone to know, up on that Hill, that we were not, and are not, pleased with any of the shenanigans that went on last week, full stop," Thompson said. "I would think that everybody should be taking time to pause and reflect and figure out what is next — I would hope everyone would be doing that."

Chet Thompson will be one of the speakers at the Argus Crude Live virtual conference taking place 26-28 January. For full details of the conference program and how to register to attend, please visit https://www.argusmedia.com/en/conferences-events-listing/crude-live.

By Elliott Blackburn