'Very Engaged' Trump Talks Biofuels Policy with U.S. Oil-State Senators

September 20, 2019

Print This Article Share it With Friends

by Stephanie Kelly (Reuters) President Donald Trump on Thursday discussed biofuels policy with senators from U.S. oil states, including Louisiana Senator Bill Cassidy, who said the president was engaged on the issue that has pitted Big Oil and Big Corn against each other.

The oil industry is opposed to the Trump administration’s tentative plan to boost annual ethanol usage mandates.

Trump put forward the plan after a flurry of meetings in recent days with biofuels and oil refining advocates where he tested ideas to compensate the corn industry, a crucial political constituency, for his administration’s decision in August to exempt 31 oil refineries from their blending requirements under the Renewable Fuel Standard.

...

In Thursday’s meeting, senators including Republicans Ted Cruz of Texas and Pennsylvania’s Pat Toomey were expected to make the case that Trump’s proposed plan could backfire by putting refineries out of business and killing jobs in key 2020 battleground states, one source familiar with the matter said.

...

Corn farmers and ethanol producers say the Trump administration’s broad use of the refinery exemption program undermines demand for ethanol at a time the industry is already suffering from a loss of foreign markets due to the U.S. trade war with China. But the oil industry says the exemptions help ensure that small refiners stay in business and have no impact on the amount of ethanol they use. READ MORE

Trump Invokes Taliban in Latest Negotiations on Biofuel Plan (Bloomberg)

Cruz, Cornyn meet with Trump on ethanol (Houston Chronicle)

Ernst Says Trump EPA Can’t Be Trusted on Renewable Fuel Standard (WHO TV; includes VIDEO)

Reynolds Hopeful Ethanol Announcement is Close (Atlantic News Telegraph)

US EPA chief sees no ethanol demand destruction from small refinery waivers (S&P Global Platts)

TRUMP SCREWED YOU, TOM STEYER TELLS IOWA FARMERS IN NEW TV AD (Iowa Starting Line)

Attack on Saudi Oil Adds Urgency to Trump’s Biofuel Promises (Morning Consult)

OUR OPINION: Glimmer of optimism emerges on RFS waivers (Sioux City Journal)

Letter: Iowa Needs Positive Action on Biofuels (Quad City Times)

Put Workers and Consumers Above Politics (Real Clear Energy)

‘Zero Evidence’ of Demand Destruction? Really? (Ethanol Producer Magazine)

Trump’s biofuels compromise is collapsing (Seeking Alpha)

U.S. EPA granted full biofuel waivers to refineries despite Energy Dept advice -memo (Reuters/Financial Post)

A battle over ethanol: Mandates in gasoline should not be raised (Pittsburgh Post Gazette)

EPA is right to grant ethanol waivers to small refineries (Caller Times)

Excerpt from Houston Chronicle: "I'm not going to announce anything or say: 'Cheers!' until I see it on paper because EPA's putting it on paper and I know there's a big voice for 'big oil' in EPA," he (Sen. Chuck Grassley, R-Iowa) said. READ MORE

Excerpt from WHO TV: Senator Joni Ernst says bad advice from the head of the EPA is to blame for President Trump signing dozens of waivers from the RFS for oil refineries, sending demand for ethanol plummeting.

In a conference call with reporters on Thursday, Ernst said she believes President Trump wants to do what's best for the ethanol industry. However she says the Environmental Protection Agency, lead by Trump appointee Andrew Wheeler, is to blame for recent policies that have harmed the industry.

...

Ernst says the President was mislead into approving those waivers by Wheeler.

"You know (President Trump) asked him to go ahead and take care of some of those waivers, so Andrew Wheeler did," Ernst said on Thursday," I don’t think Mr. Wheeler fully explained what it would do to the ethanol industry."

Last week Ernst met with President Trump, along with Senator Charles Grassley, Governor Reynolds and other midwestern leaders to discuss the impact the RFS waivers have had on the industry. Both Ernst and Grassley says they left the meeting in clear agreement with the president on how to reverse the damage to Iowa ethanol producers and farmers.

But Ernst says that plan has to go through Andrew Wheeler and she doesn't trust him to follow the president's wishes.

...

President Trump announced via Twitter three weeks ago that a "giant package" was coming for the ethanol industry. READ MORE

Excerpt from Atlantic News Telegraph: “I can’t say too much because we’re waiting to see the final wording,” (Iowa Governor Kim) Reynolds said Friday during an interview with KICD Radio at the Clay County Fair. Reynolds added that she invited the Trump to unveil the plan in Iowa.

“If what we agreed on is what we see in writing, we’ll be supporting it and inviting him here to announce it,” Reynolds said.

...

“I understand he’s trying to balance refineries that are also saying they’re shutting down with ethanol plants that are also shutting down,” Reynolds said.

This week officials announced that Siouxland Energy Cooperative in Sioux Center, is idling production at its 90-million-gallon corn-ethanol plant with president of the board of directors Kelly Niewenhuis telling DTN his company is hoping for a change of course by the Trump administration on biofuels policy, in order to bring the plant back into production.

...

In August,a Minnesota based company announced it was closing a 51-million-gallon plant, and more than 15 ethanol plants have shut down or cut production in recent months — many citing the waiver issue as a primary cause. READ MORE

Excerpt from Iowa Starting Line:Tom Steyer has a message for Iowa farmers: Donald Trump screwed you. That’s how his new TV ad in the lead-off caucus state opens, with a clip from Sen. Chuck Grassley on Iowa Press saying, “They screwed us.”

The quip from Iowa’s senior senator in August was in reference to the Trump Administration’s granting of 31 waivers to oil refineries to circumvent the blending of ethanol into the nation’s fuel supply. Those waivers drastically cut down on the amount of ethanol getting sold, shuttering several ethanol production plants in Iowa in recent weeks.

Those actions have infuriated Iowa corn farmers and ethanol producers, putting Trump’s reelection hopes in jeopardy among his core rural base in this Midwestern swing state.

...

Something else that should be noted: in Starting Line’s conversations with Iowa farmers, some have suggested they haven’t heard much from Democrats on the ethanol issue (even though they’ve been active on it). Regardless of Steyer’s presidential hopes, this will be a statewide TV message reminding rural Iowans that Trump hasn’t actually been helpful at all to their way of life since entering the White House. READ MORE

Excerpt from Morning Consult: Even the threat of action by Saudi Arabia, Iran or other actors can have profound impact on what U.S. consumers pay for fuel. Just a few months ago, crude oil prices surged after tanker attacks in the Strait of Hormuz, which runs between Iran and Saudi Arabia.

That reality stands in stark contrast to the narrative we often hear from the petroleum lobby, which claims that increased crude oil production means that biofuels and other alternatives are no longer needed.

The simple truth is that the U.S. economy remains painfully vulnerable to the whims of the global oil market. We consume 20.5 million barrels of petroleum per day, and we import nearly 10 million barrels of crude oil per day. We also export a significant volume of petroleum, primarily in the form of refined products.

As a result, elevated oil output is a great story, but it’s cold comfort to cash-strapped families that pay higher prices for fuel when foreign nations cut exports. Fortunately, we do have alternatives, including the world’s largest biofuel industry, which already supplies more than 10 percent of America’s liquid fuel. Currently, both the ethanol and biodiesel industries are operating below their full capacity.

At a time when U.S. farmers are desperate for new markets and fuel supplies are at risk, every one of America’s biofuel plants should be running at full steam. Instead, the Environmental Protection Agency has granted dozens of special “hardship” exemptions to some of the largest and most profitable oil companies in the world, including Exxon and Chevron. The exemptions allow refiners to sidestep biofuel quotas and push alternative fuels out of reach for consumers.

With more than 4 billion gallons exempted by the EPA, the handouts have nullified growth opportunities promised under the Renewable Fuel Standard and cut U.S. ethanol consumption for the first time in 20 years.

Already, dozens of biofuel plants have been forced by the EPA to close their doors or throttle back production.

...

By that same token, drivers won’t see much relief until lower-cost biofuels are put back on the market. Right now, higher ethanol blends such as E15 save consumers up to 10 cents per gallon. As of the Friday before the attack, ethanol was trading at $1.36 per gallon — far less than unblended gasoline. And that savings could grow as oil prices rise. More importantly, homegrown biofuels — produced from local crops at more than 200 plants across the heartland — provide a valuable measure of immunity from geopolitical conflicts in the Middle East. READ MORE

Excerpt from Ethanol Producer Magazine: The solution here is simple: Stop granting unwarranted exemptions to refiners that can’t prove “disproportionate economic hardship;” redistribute any exempted volumes to nonexempt parties; and follow the D.C. District Court’s order to restore the 500 million gallons illegally waived from the 2016 RFS requirements. EPA can and should do all of these things in the final 2020 RFS rule, due out in November. READ MORE

Excerpt from Seeking Alpha: Time is rapidly running out for a compromise to be agreed to by both sides even as Mr. Trump's re-election prospects continue to depend upon Corn Belt votes. Investors should be wary of any rallies in the ethanol production sector that are not supported by underlying operating conditions. READ MORE

Excerpt from Reuters/Financial Post: The Aug. 9 memo showed the EPA granted “full exemptions for those 2018 small refinery petitions where DOE recommended 50% relief.”

The memo, signed by Anne Idsal, EPA’s acting assistant administrator for the Office of Air and Radiation, did not specify how many refineries were involved.

Trump’s EPA has disregarded DOE advice on waivers in the past, Reuters has reported, marking a break from the Obama administration’s EPA, which had often either adopted energy department recommendations or, when it did not, ruled against exempting oil refiners.

...

“Granting favors to refiners that aren’t really facing an economic hardship is just one of the multiple problems with EPA’s handling of small refinery exemptions,” said Kurt Kovarik, vice president of federal affairs for the National Biodiesel Board, on the sidelines of an industry event.

“The memo clearly shows that EPA continues to disregard the recommendations of DOE,” Geoff Cooper, head of the Renewable Fuels Association industry group, said in an email.

In a clear sign the issue has become a potential political vulnerability for Trump, White House hopeful Democratic Senator Cory Booker seized on the news of the memo, calling the administration’s use of the waiver program an “abuse of power.”

He added, “Time and time again, this president and his administration have used their power to prop up their political allies, like oil companies, at the expense of hardworking American farmers, and now, they’re doing it against the advice of their own Department of Energy.”

Mayor Pete Buttigieg also mentioned small refinery waivers on Tuesday during a campaign stop in Iowa, calling them “big giveaways to oil,” drawing applause from his crowd.

...

Since Trump took office, the EPA has vastly expanded its use of the exemptions, providing waivers to small facilities owned by billionaire investor Carl Icahn and oil majors, such as Exxon Mobil Corp and Chevron Corp, Reuters has reported. READ MORE