Trump still can't find common ground between ethanol and oil

Last week we looked at the ongoing efforts of Ted Cruz and Pat Toomey to enlist President Trump in their battle to gain relief from the Renewable Fuel Standard for some oil refineries. This is a tricky situation because King Corn and the ethanol lobby are still hugely powerful in American politics and Iowa is the central battleground in that fight. Complicating things further is the fact that Trump, in one of his more disappointing moments on the campaign trail, made promises to Iowa about supporting the RFS.

These new efforts led to a meeting at the White House between the aforementioned senators, the President, and the two Iowa ethanol reps, Senators Chuck Grassley and Joni Ernst. Despite high hopes for some sort of compromise, the Iowa delegation apparently can’t find anything they can say yes to and the talks fell apart. (Reuters)

The meeting on Tuesday included Republican Senators Ted Cruz of Texas and Pat Toomey of Pennsylvania – both from major oil refining states – along with Charles Grassley and Joni Ernst of major corn grower state Iowa.

“No deal made,” said Grassley in a Twitter post after the meeting, adding the proposals discussed were “not ‘win win’” and would “destroy ethanol demand.”

Cruz issued a statement saying the meeting was “positive and productive” and added that Trump had requested another session this week. “After that meeting, I believe we are likely to arrive upon a win-win solution,” Cruz said.

White House spokeswoman Sarah Sanders confirmed the Tuesday meeting on biofuels and said: “We’re going to continue having conversations.”

This is not a minor issue by any means and it has real-world effects which can be seen by all. Remember that we already had one of the largest refineries in the northeast go bankrupt because of the RFS and the cost of the Renewable Identification Numbers (RINs) market. And that’s happening in the middle of one of the greatest U.S. oil booms in history.

What the oil refining states are looking for here isn’t total victory, with a complete repeal of the RFS. (Which is unfortunate, because that’s what really needs to happen.) They’re asking for some of the quotas to be rolled back slightly and for Washington to grant some exemptions in cases where otherwise viable businesses are being crushed.

And what reason did Chuck Grassley give for refusing to even discuss a modest compromise? It would, “destroy ethanol demand.”

I was under the impression that Grassley was a conservative, which should include being a fiscal conservative. If so, perhaps he and Joni Ernst could consider the fact that if the demand for a product only exists because the government is holding a gun to all of the consumers’ heads, there really isn’t a demand for it in the first place, now is there? This is an artificial market cooked up during the Bush 43 administration to gain favor in Iowa, an early primary state. And the Cornhuskers are still holding it over everyone’s heads to this day.

Another meeting is supposedly going to be taking place soon. Donald Trump is renowned as a dealmaker, as we are so often told. Let’s hope that he can sharpen up his old skills and get this done.