Corn Producers Get A Boost From Trump Proposal to Increase Ethanol Production

Photo: AP

After starting a trade war with China that hurt midwestern farmers, and giving “small” refineries a free pass on requirements to produce ethanol, the Trump Administration last Friday announced new rules to increase the mandates for ethanol in order to increase the sale of the biofuel beyond the current requirement of 15 billion gallons annually.

Why This Matters:  With so many special interests pressuring the President, it is hard to please everyone. The Trump Administration has repeatedly given waivers to “small” refineries to allow them not to make gasoline with ethanol in it, which really angered midwestern farmers.  Midwestern farmers were growing increasingly angry and lobbying the White House for relief.  But because the help won’t come until next year, it does not meet the farm groups’ demands, and at the same time the proposal angered oil and gas industry groups.  The American Petroleum Institute (API), the lobby for the oil industry, and American Fuel & Petrochemical Manufacturers, which represents oil refineries, announced that they would challenge the policy.  And environmental groups are not overly supportive of ethanol even though it is technically renewable — it does not ultimately reduce greenhouse gas emissions because it is so energy-intensive to produce.

Mixed Reaction To Ethanol Blending Proposal

  • Midwestern farm-state representatives were pleased — for example, Senator Chuck Grassley, of Iowa said in a statement that Mr. Trump had “listened to the concerns of farmers and biofuel providers and delivered on their behalf.”
  • But oil and gas state representatives were unhappy with the proposal — Senator John Barrasso of Wyoming, noted that refineries employed thousands of people in Wyoming alone, saying “Any plan to transfer small refineries’ biofuel obligations to other refineries will do more harm than good.”
  • The oil and gas industry argued that “What farmers are mad about is trade policy,” said Frank Macchiarola of API.  “This administration, as I’ve said before, is trying to remedy one bad policy with another bad policy.”
  • And farmers are concerned that the Administration will continue to offer waivers to small refineries — with the large refiners never making up the slack — thus rendering the new requirements meaningless.

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