Just over a year after embracing the bipartisan effort to make E15-a 15% ethanol-gasoline blend-permanently available, the American Petroleum Institute (API) has reversed course. In a letter to congressional leaders, API President Mike Sommers cited "new costs on refiners and disrupted market dynamics" as justification for opposing the bill, officially titled the Nationwide Consumer and Fuel Retailer Choice Act.

This development casts doubt on what had been hailed as a breakthrough in U.S. energy policy: a détente between fossil fuel producers and biofuel advocates. The shared goal had been to sustain liquid fuel relevance amid the rise of electric vehicles, while also providing a vital market outlet for American corn growers, who depend heavily on ethanol demand.

Now, with API backing away, ethanol producers and farmers are left scrambling. "It's very disappointing to have E15 held hostage by API due to unrelated policy disputes," said Monte Shaw, executive director of the Iowa Renewable Fuels Association. The move threatens the future of over one-third of the U.S. corn crop, which is converted into ethanol annually.

At issue are broader disagreements tied to the Renewable Fuel Standard (RFS) and recent decisions by the Trump administration regarding small refinery exemptions (SREs). API argues that reallocating biofuel quotas unfairly punishes compliant refineries, while rewarding those who failed to invest in blending infrastructure.

Meanwhile, a new tax law has further stirred tensions. Championed by Republicans, the measure excludes fuels made from foreign feedstocks from the 45Z tax credit, favoring domestic corn and soy. Oil refiners are also frustrated by a proposed EPA rule that would discourage imports of ingredients like used cooking oil from Asia-protections aimed at supporting U.S. farmers, but costly for blenders reliant on those feedstocks.

"When the ag side overplays their hand, they should expect pushback," said Mike McAdams, president of the Advanced Biofuels Association, which includes oil giants such as ExxonMobil and Chevron. He warned against placing the financial burden solely on refiners.

Despite the political rupture, Sen. Deb Fischer (R-Neb.) and other ethanol advocates are hopeful. API's letter still affirms its support for year-round E15 in principle, and lawmakers say that could keep negotiations alive. "Access to E15 is essential at a time of low crop prices, excess supply, and tariff-driven export uncertainty," said Fischer, noting that the Trump administration also supports the policy.

The debate has profound implications for U.S. farmers facing tight margins, rising input costs, and limited market options. With ethanol margins narrowing and biofuel demand stagnating, many in the ag sector see year-round E15 as a necessary policy anchor to stabilize commodity prices and create downstream certainty for co-ops, fuel retailers, and rural economies.

"It's disappointing to see some fissures developing in that relationship," said Geoff Cooper, President of the Renewable Fuels Association. "But we're encouraged that there's still a path forward."

As negotiations continue, so does the uncertainty-for producers, blenders, and the more than 300,000 U.S. jobs tied to the ethanol supply chain. With harvests underway and export markets still reeling from trade disputes, the future of the U.S. biofuel sector may now hinge on whether Washington can repair this fractured alliance.