In the News
Feb 27 2018
President Trump will meet officials from the rival oil and ethanol industries as early as Thursday in hopes of making peace in the cutthroat fuel sector by resolving complaints about the federal requirement to blend biofuels into gasoline and diesel fuel.
Trump requested the session after a meeting with four Republican senators failed to find an appetite for previously rejected revisions in the Renewable Fuel Standard (RFS). At the same time the senators met at the White House, the Senate confirmed Bill Northey as agriculture undersecretary. Senator Ted Cruz (R-TX) had blocked a vote on Northey for four months as leverage for changes in the RFS.
“No deal on RFS reform was reached at the White House meeting today,” said Senator Chuck Grassley (R-IA) during a teleconference. Grassley and fellow Iowa Senator Joni Ernst (R) said they rejected Cruz’s proposal of a price cap on credits, known as RINs, that refiners must buy if they cannot blend enough ethanol to comply with the RFS. A price cap or a RIN waiver would remove the incentive to blend ethanol, they told reporters.
The oil industry has cited the bankruptcy of a Philadelphia refinery as proof that the RFS is unfair. The refinery says it went broke because of the cost of RINs. Grassley and Ernst cited analyses saying RINs are not a threat. “When he hears it from the (ethanol) industry, it may have a bigger impact,” said Grassley.
Looking toward the meeting of industry leaders and Trump, Cruz appeared to suggest a cap on RIN prices – he has proposed a maximum of 10¢ – could be paired with year-round sales of E15, a higher ethanol-to-gasoline blend than the traditional 10%.
“We made real progress and, with the president’s leadership, I believe we are close to solving the problem,” said Cruz in a statement. “After that meeting, I believe we are likely to arrive upon a win-win solution that (1) stops the RINs system from imposing billions in unnecessary costs for refineries and threatening the jobs of tens of thousands of blue-collar union workers, and (2) expands the potential market for ethanol, allowing corn farmers to sell substantially more corn each year.”
Ernst sniffed at suggestions such as the RIN cap or counting ethanol exports toward RFS compliance. The RFS was created to reduce U.S. reliance on petroleum imports. “Iowans will not have the wool pulled over their eyes, and we made that clear” at the White House, she said.
The administration gave no guarantees at the meeting that it would not intervene on its own to modify the RFS, said the senators. Except for a brief alliance in 2005, the oil industry has pushed for elimination of ethanol incentives since the homegrown fuel came into large-scale production three decades ago, said Grassley. “I would not expect Senator Cruz to back off on any subject,” he said, once the Texan has sunk his teeth into it.
“We’re going to be fighting this out,” said Ernst.
Trump won the rural vote by large margins in 2016 with a platform of tax reform, regulatory relief, and support for ethanol. He quashed proposals last fall to weaken the RFS.