Federal Biofuel Mandate Adds Up To 37 Cents To Every Gallon Of Fuel, Estimates Show

The federal biofuel mandate adds between roughly 7 cents and 37 cents to every gallon of fuel Americans buy, according to government and think tank estimates.

The Environmental Protection Agency (EPA) put the mandate’s cost at 6.8 cents a gallon for gasoline and 18.6 cents for diesel in 2026 in a proposed rule it published Oct. 16. Both figures compare prices to what they would be with no mandate.

The diesel figure “adds roughly $75 – $85 per week to our members’ fuel bill,” a spokesperson for the Owner-Operator Independent Drivers Association (OOIDA), which represents small-business truckers, said in a statement to the Daily Caller News Foundation.

“OOIDA opposes the federal biofuel mandate because it is a needless expense that neither delivers safer roads nor does anything meaningful to improve the lives of America’s small business truckers,” the spokesperson said.

Max Pyziur, research director at the Energy Policy Research Foundation, said in a statement to the DCNF that the think tank’s original method puts the cost at about 37 cents a gallon at the latest credit prices.

Over a year, “this implies about $74 billion based on annual consumption of about 140 billion gallons of gasoline and almost 60 billion gallons of diesel,” he said.

The foundation is rethinking that method, which Pyziur described as “particularly aggressive (but not the most aggressive)” compared with other estimates. The foundation gets 27 cents a gallon when it borrows parts of a less aggressive method from a commodity consultancy, Pyziur said.

“This still implies a cost of $54 billion annually,” he said. “In the end, the cost is passed on to consumers.”

Under the mandate, known as the Renewable Fuel Standard (RFS), refiners and importers have to blend biofuels such as corn ethanol and biodiesel into the fuel they sell. Each gallon of biofuel comes with a credit, and a company that blends too little has to buy credits from one that blended more.

The American Fuel & Petrochemical Manufacturers (AFPM), a trade group for refiners, said in a statement to the DCNF that compliance costs for refiners “have hovered around 30 cents per gallon” recently and “reached as high as 40 cents per gallon earlier this summer.”

“As for the buyer impact, consumers bear a substantial portion of the RFS cost, though it varies by region and by fuel,” the group said.

The EPA considers how its decisions on final volumes “may affect obligated parties and fuel users, including diesel consumers such as truckers and farmers, while ensuring the program continues to meet the law’s requirements,” the agency’s press office said in a statement to the DCNF.

Growth Energy, an ethanol trade group, did not respond to the DCNF’s request for comment.

AFPM said in a March 27 release that compliance costs had “hit all-time records this week, nearing 25 cents for each gallon of gasoline and diesel fuel produced in the United States.”

Pyziur said that credit prices “have declined from the recent peaks seen at the beginning of July” after regulators gave refiners more time to comply.

AFPM said that the EPA based its estimates on a lower credit cost.

“As a result, their estimates are likely lower than what consumers actually paid this year,” the group said.

The EPA puts the credits’ cost under the current standards at 27.5 cents a gallon for 2026, according to the proposal.

AFPM said that it expects the mandates to run down the stock of credits saved from earlier years, which it said could make the credits “even more expensive in the months and year ahead.”

Diesel prices topped $6 a gallon nationally for the first time in September, the DCNF reported.

Andy Lipow, president of Lipow Oil Associates, said in a statement to the DCNF that most companies blend ethanol into gasoline but not biofuels into diesel, which leaves them buying credits. He called his explanation an oversimplification of the program.

“As a result, the cost of compliance with the RFS is more for diesel fuel and less for gasoline,” Lipow told the DCNF. He added that “if the RFS disappeared tomorrow, diesel prices would decline.”

“Unlike the EPA, EPRINC doesn’t make a distinction in the added RFS cost to either diesel or gasoline; the amount is the same,” Pyziur said, using the foundation’s acronym.

“Higher taxes or regulatory costs for diesel end up filtering down to consumers in the form of higher prices,” Ben Lieberman, a senior fellow at the Competitive Enterprise Institute, said in a statement to the DCNF. “Congress should consider repeal or at least reform of the Renewable Fuel Standard, which would help bring down both gasoline and diesel prices.”

The Oct. 16 proposal would add less than a cent a gallon to the EPA’s estimates, the agency said. The agency waived part of the 2025 requirement for small refineries in August, and the proposal would make other refiners and importers cover more of it.

Small refineries got out of 1.76 billion credits of their 2025 requirements, which was 770 million more than the EPA expected, the proposal says. The EPA wants other refiners to make up that 770 million in 2026 and 2027.

Refiners will likely pass the cost of the extra credits to consumers, the agency said in the proposal.

“EPA’s proposed ‘reallocation’ is unlawful and would only make fuel more expensive for U.S. consumers,” AFPM President and CEO Chet Thompson said in an Oct. 13 statement.

The Renewable Fuels Association, an ethanol industry group, disputed the EPA’s estimate in a statement from President and CEO Geoff Cooper to the DCNF.

“We fundamentally disagree with EPA’s suggestion that the RFS is making gas prices 1-2% higher than they would be otherwise,” Cooper said.

“At the wholesale level, ethanol with a free RIN credit attached is selling for $2 per gallon, compared to $3 per gallon for gasoline,” Cooper said, referring to the program’s compliance credits. The group had praised the proposal in an Oct. 13 statement, saying it would help offset lost demand for ethanol producers and farmers.

Clean Fuels Alliance America, which represents biodiesel and renewable diesel producers, said that those fuels add 8.6 percent to the U.S. supply of distillate fuels, the category that includes diesel. Paul Winters, the group’s director of public affairs and federal communications, said in a statement to the DCNF that the exemptions the EPA gave small refineries in August did not lower fuel prices.

“In fact diesel prices continued to climb,” Winters added.

Public comments are due Dec. 4, according to the proposal.

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