The President needs to climb off the ethanol teeter-totter

Call it a teeter-totter or call it a tug-of-war. The fact is, as we’ve discussed here previously, President Trump is stuck in the middle of an ongoing feud between the ethanol lobby (a.k.a King Corn) and the oil and gas industry. He’s been trying to keep both sides happy since he began running for office several years ago and it’s simply not working.

We’re seeing the latest signs of Trump’s exhausting efforts to please both factions with the outcome of meetings between the President and the heads of the Department of Agriculture and the EPA. It appears that the White House will be tossing yet another bone to the corn farmers of Iowa. (Reuters)

The Trump administration is considering ramping up biofuel blending quotas in the coming years to assuage anger in the Farm Belt over its recent broad use of waivers for small refineries, but is not planning to rescind any of the exemptions it has granted so far, four sources familiar with the matter said.

The approach would mark a mixed result for the agriculture industry and its backers who had been pushing the administration to revoke some of the exemptions, which they argue hurt demand for corn-based ethanol by freeing refiners from their obligation to blend biofuels into their products.

The proposals emerged a day after U.S. President Donald Trump on Thursday summoned his Agriculture Secretary Sonny Perdue and Environmental Protection Agency Administrator Andrew Wheeler to the White House to discuss ways to boost biofuel demand.

First, the President extended the sale of E15 gasoline year-round, pleasing the ethanol lobby but angering both environmentalists and the oil industry. Then he turned around and issued waivers to a number of smaller and older refineries, exempting them from the ethanol blending mandates in the Renewable Fuel Standard. This pleased the refineries but angered the corn farmers who claimed that it gutted demand for their product.

And now, if these reports are true, President Trump will approve an increase in the already established ethanol blending levels for 2020 and 2021. This may partially assuage the anger of King Corn for a while, but with some refineries already having been exempted, the rest of them will have to blend even more corn juice into our gasoline. And that’s just going to tick off the oil and gas industry yet again.

How long can this go on? No matter what Trump does to curry favor with one group, the other one will be up in arms. He wants to play nice with the folks in Iowa, but he also needs to maintain the support of states with a lot of refineries, including Pennsylvania He can’t keep both of them happy at the same time, so it seems obvious that he needs to pick a side and stick with it.

Iowa was seen as critical in the 2016 GOP primary, but he doesn’t need to worry about them now. Pennsylvania was absolutely a huge factor in his general election victory and will be just as important next year. Is this really that tough of a choice? Besides, Donald Trump is supposed to be running as a conservative. The market for ethanol is largely an artificial creation of the federal government. Without the mandates in the Renewable Fuel Standard, that market would be far smaller. That’s no way to manage the free market.

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David Strom 9:21 PM on June 01, 2023