The White House is taking a break from biofuels policy, at least temporarily, after two meetings with President Trump at the table failed to find consensus between the oil and ethanol industries. The only agreement, according to Iowa Sen. Chuck Grassley, who was part of both meetings, “was to look at economic studies” about the impact of the Renewable Fuel Standard and possible changes.
Although the potential of a third meeting was raised, nothing was finalized as this week began. The president’s schedule is announced a day at a time.
Texas Sen. Ted Cruz doggedly wants to link the sale of higher blends of ethanol in gasoline with a limit on the cost of the credits, called RINs, that refiners must buy if they don’t mix enough biofuels to meet RFS targets. Ethanol makers say there is no need for a two-part package — year-round sales of E15, a richer blend of ethanol than the traditional 10 percent, would generate enough consumption that there would be little need to buy RINs. Grassley says a cap on RIN prices, advocated by Cruz, would destroy the ethanol market.
“Farmers across the country are facing historically low prices and the farm economy is truly suffering,” said a resolution approved by farmers at the annual Corn Congress. “Therefore, we, the assembled voting delegates of the National Corn Growers Association, do ask President Donald Trump to retain the current RIN system without change.” The Hagstrom Report said growers attending the Commodity Classic, a mammoth gathering of corn, soybean, wheat and sorghum growers feared that Agriculture Secretary Sonny Perdue would support a cap on RIN prices.
When questioned by an Iowa farmer at the Commodity Classic, Perdue said, “No, I don’t think a cap on RINs [is] the solution but we have got to engage, obviously in how to use this opportunity to grow demand rather than just saying everything is fine and there is no problem. You can’t just sit back and say, ‘No, no, no, no.'”
Perdue said he unequivocally supports the RFS but also questioned why corn farmers devoted so much attention to RIN prices. More than a third of the corn crop is used to make ethanol.
Meanwhile, the Renewable Fuels Association, a trade group, said a record 15.84 billion gallons of ethanol were produced during 2017, based on Energy Department data. “The data also preliminarily indicated record domestic ethanol blending, with 14.4 billion gallons blended into 142.9 billion gallons of finished gasoline, equating to a record average blend rate of 10.08 percent.” The oil industry has argued the gasoline market is becoming saturated with ethanol and there is little room to blend more of the biofuel.