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DAVID KRUSE

By Staff | Oct 9, 2015

Here is some inside scoop on John Boehner and ethanol.

Former Iowa congressman Tom Latham was my congressman before redistricting.

John Boehner and Tom Latham are best friends, actually, more like brothers.

Former legislators were not invited to the Special Joint Session of Congress for the Pope Francis speech with the one exception being Tom Latham who got a pass from Boehner to be on the floor. Boehner is, of course, Catholic having served as an altar boy while Tom is Lutheran.

What does this all mean to you? Tom Latham is a strong supporter of biofuels. By extension Boehner kept the wolves away from beating down the door to get at the RFS. Some GOP committee Chairmen, Bob Goodlatte and Jeb Hensarling, are anti-ethanol but they knew that any bills from committees to gut the RFS would never be advanced by Boehner so didn’t press the issue. Deferring to his boss, Kevin McCarthy, who is likely to become the next Speaker, never pushed it either.

Losing Boehner as House Speaker was not a good thing for the biofuel industry. Kevin McCarthy, Boehner’s likely replacement is from California and while he is no liberal he is no friend of the ethanol industry or RFS.

Here are some quotes on the issue from McCarthy celebrating the EPA’s rollback of RFS volumetric targets; House Majority Whip Kevin McCarthy, R-Calif., said the EPA rule is an admission that the foundation of RFS is flawed and hurting the U.S. consumers.

While the law’s original intention was to help secure domestic energy supply in response to declining domestic oil and gas production, today’s decision also reflects the transformation in the energy landscape taking place in North America.

The ethanol mandate requiring refineries to blend more ethanol into gasoline than can be tolerated by today’s car engines is unnecessarily increasing the price of corn, hurting California farmers, consumers, and motorists.” Those who understand the ethanol issue know McCarthy’s claims are baloney taken almost verbatim from the Big Oil spin-book against ethanol.

Kevin McCarthy signed onto the letter that Congressman Bob Goodlatte sent the EPA asking administrator Gina McCarthy to gut the RFS.

“Dear Administrator McCarthy, while the blend-wall is a pressing issue, the federal government can help avoid a dangerous economic situation by adjusting the normally rigid Renewable Fuel Standard mandate down to align with gasoline market conditions and realities. We therefore urge the EPA to consider a fair and meaningful nationwide adjustment to the ethanol mandate in the Renewable Fuel Standard. Prompt action by the EPA can help to ease short supply concerns, prevent engine damage, save jobs across many U.S. industries, and keep families fed.” That was Big Oil channeling through McCarthy.

McCarthy voted against the extension of the biodiesel tax credit. He is pro-Big Oil with one Congressional political contribution tracking function showing $204,000 received by McCarthy from entities supporting repeal of the RFS. He is one of the “donor class” that Donald Trump says is running things for the wealthy. He opposed the wind energy credit while supporting sustaining the tax deduction from oil and gas income.

Ladies and Gentlemen … we have a problem. We will soon find out how much we missed John Boehner. I believe that Kevin McCarthy is not going to keep the wolves away from the RFS, and will actually open the door to his friends who unlike Tom Latham relish the opportunity to attack it.

For the time being President Obama will protect the RFS, but it changes the chess board. Where we once had a House Speaker who would block any vote on RFS repeal, and a President in the White House who would veto it if it arrived at his desk this makes the next President much more important to the Ag sector.

Not all conservatives oppose ethanol … it breaks down more along the line as to who is in Big Oil’s pocket and who isn’t. Despite the setback that oil prices have given the oil industry, they own far more Congressman than the ethanol industry could ever afford. As to Presidential candidates on biofuel, I would be shocked if Donald Trump was not a strong supporter of ethanol given his “America First” campaign and because Sam Clovis is Trump’s National Co-Chairman and policy advisor.

Sam is a pro-ethanol conservative. Many of the other top GOP candidates with the exception of Cruz and likely Rubio who do not support the RFS, claim support to a degree with the consensus likely forming around keeping the RFS only until it expires in 2022. Yet I have low confidence in many of these candidates that if elected to the White House, and if Congress sent them a bill to repeal the RFS, they would not sign it. Have you noticed that politicians often mislead or lie?

The direct question to these candidates should be “if Kevin McCarthy sent you a bill repealing or gutting the RFS would you sign it?”

I don’t have confidence in many of the candidates to follow through for biofuels. On the other side, Hillary would veto repeal of the RFS, but Joe Biden is said to be the reason the EPA backed off on implementing the RFS as written.

The bottom line is that a key component of support for the RFS leaves office October 30 so that the US House will be poised to be much more anti-ethanol-anti-RFS under Speaker Kevin McCarthy than under Speaker John Boehner.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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