A surprising policy shift by the American Petroleum Institute (API) is sending ripples across the U.S. corn and ethanol sectors, as the oil lobby withdraws support for a bipartisan bill allowing year-round sales of E15-a gasoline blend containing 15% corn-based ethanol. The move threatens to upend hard-won progress between the energy and agriculture industries on renewable fuel policy.

The bill, led by Republican Senator Deb Fischer of Nebraska, had garnered rare cooperation between farm-state lawmakers and Big Oil. For corn growers and ethanol producers, E15 represented both an expanded market and a cornerstone of future demand. With API's withdrawal, that alliance is now in question.

In a letter sent Tuesday to congressional leadership, API cited a host of recent policy developments as reasons for the reversal. Chief among them is the new tax law signed by President Donald Trump, which disqualifies U.S. fuel producers from claiming a valuable tax credit if they use non-North American components in their renewable fuels. API also criticized the Environmental Protection Agency (EPA) for its handling of E15 waiver requests from Midwestern states, a key battleground in the broader biofuels debate.

API stated that a "more holistic approach" is required for E15, one that better accounts for the broader challenges facing the liquid fuels market. The statement signals that oil refiners may seek broader concessions in any future fuel policy negotiations-potentially putting more pressure on the ethanol sector to compromise.

For U.S. corn producers, the timing couldn't be worse. After a volatile year marked by input cost fluctuations, erratic weather, and continued global trade pressures, the promise of increased ethanol blending offered some stability. Now, with API stepping away, that outlook is less certain. Ethanol accounts for roughly 40% of U.S. corn usage, and setbacks in fuel policy can rapidly affect commodity prices, co-op planning, and farm income.

Despite the pullback, Sen. Fischer's office emphasized in a statement that API still supports the year-round availability of E15, aligning with the position of former President Trump and several Midwestern governors. However, without active support for the current bill, the legislative path is far less clear.

This development renews lostanding tensions between the oil and agriculture sectors, both of which have lobbied aggressively over the Renewable Fuel Standard (RFS) and EPA blending mandates. Farm-state lawmakers have consistently pushed for higher ethanol mandates, while refiners have fought to limit them, citing infrastructure costs and regulatory burdens.

The latest shift by API underscores the fragile nature of these alliances and highlights the importance of consistent biofuels policy in securing loterm demand for corn. As the 2025 harvest wraps up and winter policy sessions loom in Washington, producers, co-ops, and ethanol facilities will be watching closely to see how this political pivot reshapes the legislative landscape.