Premarket action on Wednesday had the three major U.S. indexes trading mixed. The S&P 500 was up 0.02%, while the Dow Jones industrials were down 0.05% and the Nasdaq 0.04% lower.

On Tuesday, Reuters cited three unnamed sources who said that the U.S. Environmental Protection Agency (EPA) will not include the electric vehicle (EV) industry in the federal biofuel blending program. An estimated $3 billion that would have gone to EV makers annually has just evaporated. And Tesla Inc. (NASDAQ: TSLA), which makes about two-thirds of all EVs sold in the United States, loses some $2 billion in free money.

The Energy Policy Act of 2005 included a phased-in requirement to add more ethanol to the fuel sold at U.S. gas stations. Currently, about a billion gallons of ethanol are added every year to the 150 billion gallons of gasoline U.S. drivers burn every year. To comply with the law, oil refiners have to buy ethanol to blend with their gasoline, adding to their costs, not their profits.

Instead of buying ethanol, refiners also can buy renewable identification numbers, known as RINs, that are credits equal to gallons of ethanol or other biofuels. RINs are tradable, and if a refiner cannot or does not want to buy renewable fuels, that refiner can buy RINs to meet the requirements of the law.

What the EPA was considering was giving EV makers credit, in the form of RINs, for not burning gasoline. Those payments would essentially have been free money to Tesla, GM, Ford and other EV makers. Taking away the credit essentially puts the $3 billion into the pockets of the U.S. farmers who grow the corn that is converted into ethanol, about a third of the U.S. corn crop. Corn prices have risen by about 10% since mid-May due to the threat of a drought in the Midwest.

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Tesla got some of that back earlier this year when the Internal Revenue Service qualified Model 3 buyers to receive the full $7,500 tax credit rather than the IRS’s initial determination that the credit would be limited to $3,750 because some of the battery’s components were sourced from outside the country. According to Barron’s, that decision results in Tesla buyers receiving about $750 million in added tax credits that Tesla does not see as cash but can use to market its vehicles.

Speaking of batteries, a Rivian Automotive Inc. (NASDAQ: RIVN) R1T electric pickup reportedly burst into flames at an Electrify America charging station in Mill Valley, California. According to a report at Inside EVs, the damage to the vehicle is irreparable.

Here is a look at how U.S. markets fared on Tuesday.

Seven of 11 market sectors closed higher. Financials (1.33%) and consumer cyclicals (0.99%) had the day’s best gains. Health care (−0.88%) and consumer staples (−0.47%) posted the day’s biggest declines. The Dow closed up 0.03%, the S&P 500 up 0.24% and the Nasdaq up 0.36% on Tuesday.

Two-year Treasuries added five basis points to end Tuesday at 4.51%, and 10-year notes closed up one basis point at 3.70%. In Wednesday’s premarket, two-year notes were trading at around 4.52% and 10-year notes at about 3.69%.

After U.S. markets closed Tuesday, the American Petroleum Institute reported that the U.S. crude oil inventory dipped by 1.7 million barrels last week. Gasoline inventories rose by 2.4 million barrels, and distillate (diesel fuel) inventories rose by 4.5 million barrels. The U.S. Energy Information Administration reports weekly petroleum inventories after U.S. markets open on Wednesday.

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