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By Staff | Dec 27, 2017

They had their meeting. Eleven anti-ethanol Senators including Ted Cruz, the anti-ethanol EPA administrator Scott Pruitt, Ag Secretary Sonny Purdue, White House economic advisor Gary Cohn and President Trump met to decide the best way to go about screwing the ethanol industry for the benefit of petroleum refiners. They would like to revamp the RFS so that it limits use of ethanol to 9.7 percent of gasoline consumption in the U.S. They want to hold the line blocking market access to the motor fuels market at E-10. That serves as a needed octane additive for the industry. They also want to end the blending requirement for refiners so they do not have to blend ethanol or buy RINS to meet their RFS obligation. They would also like to tag each gallon of ethanol that is exported with a renewable identification number so the number of RINs is enlarged, making it easier to acquire one so that they do not have to blend ethanol.

Pruitt, the SOB at the meeting (Saboteur of Biofuel) is coming at ethanol from other directions, sitting on the E-15 vapor waiver keeping E-15 from being sold year around. When he reduces CAFE mileage requirements he undermines demand for ethanol as ethanol is the best source of octane to meet higher mileage standards. The EPA maintained the base volumetric targets in the RFS only because the President stopped Pruitt’s first plan to reduce them. This meeting was them taking another shot at getting the president to change his mind. Pruitt told the group that there were administrative actions that EPA could take against the RFS if Trump would let him. I took that as he was asking permission this time unlike the last.

Sonny Purdue is not known to be an ethanol opponent but he is not known as being a strong supporter either. Cruz has a hold on the Senate confirmation of Bill Northey to a USDA post and Purdue wants the hold released. I knew that Bill did not want his nomination to be traded for concessions on the RFS. That would have ruined him politically back home in Iowa. When tribal loyalty is tested relative to doing what is right, I frankly would not trust any of these politicians.

Pro-ethanol senators led by Chuck Grassley, rebuffed the meeting falling back on Trump’s campaign pledge to support ethanol. I am going to conclude that President Trump doesn’t like the position that he has been put into over the RFS. He promised during the campaign to support ethanol. I heard him in person at the Biofuels Summit. Iowa Republicans jumped on the Trump bandwagon and then Governor Terry Branstad’s son Eric, went to work for Trump joining the administration. They delivered a landslide for Trump in the election. He is on the line as an official RFS supporter. Should he concede anything on the RFS, he will have made fools and liars out of a whole lot of people besides himself. He already lied in Iowa by promising that farmers and corporations would pay the same tax rate. That is not what is in either the House or Senate tax bill and yet Trump will love and sign whatever they send him regardless of what he promised here in Iowa.

The RFS is not costing any refinery jobs but slashing the RFS would cut a lot of jobs in the rural Ag economy where the ethanol plants are located. Those ethanol plants saved American consumers huge sums for gas at the pump when hurricanes shut down over 25 percent of U.S. refinery capacity. Pump prices did rise but not nearly so much as they would have without ethanol refineries adding to the U.S. motor fuel supply. Ethanol refineries are a component of our national security.

Senator Grassley says that he is not concerned by the meeting because he has the president’s solemn promise not to mess with the RFS so there is nothing to worry about. I hope that is true but I have read other anti-ethanol politicians arguing that Iowa won’t mean anything in the next election so it doesn’t matter if Trump dumps ethanol. To balance that, Chuck Grassley is Chairman of the Senate Judiciary committee which will hear and try the case should the House pass impeachment charges against the president. . .something it will surely do if the Democrats take control in the mid-term election. Assuming Grassley is still Chairman of the Judiciary committee and has shown no problem serving tribal interests he could become extremely important to the president remaining President. Trump has to be careful about making an enemy out of Chuck Grassley like he has out of other Senators.

He is also under great pressure from other supporters including his buddy Carl Icahn who reportedly owes about $200 mln for RINs, to meet the RFS obligation of his refinery. The anti-ethanol Senators at the White House meeting are all essentially betrothed to the petroleum industry. Heck. . . they got their shill appointed head of the EPA so imagine their frustration at not slipping past Trump’s commitment to the ethanol industry. They want total control of consumer access to motor fuel back.

President Trump concluded the meeting without any resolution. He would like them to work the differences out. The problem is that there are no differences. The RFS is law and there is no impetus to want to change it where ethanol matters to the Ag economy. They are not done. Cruz says that he has a win-win for refiners and ethanol interests but kept it a secret as to what it was. Opponents are going to keep coming at this thing.

I was thinking that Chuck Grassley was too old the last time re ran for re-election . . . but where would be without him?

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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