Trump sides with farmers in ethanol proposal, angering oil industry

The Trump administration unveiled a fuel proposal Friday that would buoy corn farmers and ethanol producers to the detriment of the nation’s oil industry.

The proposal from the Environmental Protection Agency (EPA) would require oil refineries to blend more ethanol into gasoline, while also paving the way for year-round “E15” fuels that are blended with 15 percent ethanol. 

The proposal from the EPA would require refineries starting next year to blend a minimum of 15 billion gallons of ethanol into fuel, one of the escalating targets laid out in current law that has never been met. 

{mosads}The rollout marks the latest twist in a months-long feud between two groups viewed by President Trump as key supporters in his base: farmers and the oil and gas industry.

“Once again the president has demonstrated he’s a champion for our nation’s farmers and for rural America,” a senior EPA official said Friday on a call with reporters, characterizing attempts to please both farmers and the oil industry as a “difficult issue.”

The concessions in the proposal go beyond what farmers had asked of the president but omit one key component: There is no requirement to blend ethanol produced this year that was set aside when Trump exempted 31 small refineries from adding ethanol to their fuel product.

The decision to issue those waivers in August, following a promise by Trump to reevaluate the program, sparked backlash from corn farmers who had already been hit hard by Trump’s trade war with China.

Farm groups have been putting steady pressure on the White House for months to revise the program, and Friday’s announcement largely appeased them.

“Corn farmers weren’t shy in telling the President that the impact of these waivers would lead to significant consequences for farmers, folks working at ethanol and biodiesel plants, and the countless other rural jobs that depend on this market. The President is finally telling the EPA that enough is enough, they must follow the law, and we appreciate that,” Kevin Ross, president of the National Corn Growers Association, said in a statement.

Sen. Joni Ernst (R-Iowa) was among the lawmakers from corn-producing states who issued statements Friday praising the proposal.

But the oil industry appeared just as unhappy as farmers were elated.

“Let’s not sugar coat it, ethanol mandates are being raised because a handful of corn-state senators have extorted it from the president using election year politics,” LeAnn Johnson with the Small Refiners Coalition said in a statement.

Both the American Petroleum Institute (API), the lobby for the oil industry, and American Fuel & Petrochemical Manufacturers, which represents oil refineries, called the proposal concerning, vowing to challenge the policy because “it is by no means a win-win.”

“The administration is heading in the wrong direction on ethanol policy and we also believe that it’s being done for all the wrong reasons, which are political and not in the best interests of our energy security,” Frank Macchiarola, API’s vice president of downstream and industry operations, told The Hill. 

“What farmers are mad about is trade policy,” he said. “This administration, as I’ve said before, is trying to remedy one bad policy with another bad policy.”

The oil industry has argued that many cars cannot effectively burn E15 fuel, and they are also concerned by hints from the administration that it might continue offering waivers to small refineries.

That portion of the program is viewed as problematic by farmers as well. When small refineries don’t blend ethanol in, other refineries are supposed to pick up their slack. But farmers were irked that the EPA would grant exemptions and then never force other refineries to add in extra ethanol.

Macchiarola said it’s unfair to put that burden on refineries that are already blending in the required amounts of ethanol.  

When asked how the EPA would begin enforcing that portion of the law, an EPA official said only that it would determine that through the rulemaking process.

—Updated at 12:52 p.m.