A leading trade group for the petroleum industry warned President Trump on Tuesday to ditch his plan to boost ethanol production, saying it would be a “disastrous political decision.”
Frank Macchiarola, a vice president of the American Petroleum Institute, said the Mr. Trump would be hurting consumers and refineries to satisfy rising complaints from farmers about lost demand for biofuels.
“This is fundamentally about the administration consistently caving to pressure from the ethanol industry for really no reason,” Mr. Macchiarola told reporters on a conference call. “This is a response to pressure from one constituency at the risk of harming refineries, refiners and consumers all across the country.”
He said the petroleum industry would “vigorously challenge this misguided policy” if the White House makes any move to raise requirements for ethanol production.
The president said this week that he will announce a “big additional list” of policy moves within two weeks to boost ethanol demand.
“Will be even better for Ethanol, and we save our small refineries!” Mr. Trump tweeted.
The president also referred to Brazil’s decision to renew and increase the amount of tariff-free ethanol imports. The Brazilian government will allow one year of tariff-free ethanol imports up to a limit of 750 million liters [198 million gallons], compared to the former quota of 600 million liters.
Americans for Limited Government President Rick Manning said the trade deal with Brazil to buy more corn and ethanol “is a prime example of this president’s ability to offset attacks on our economy by China.”
“Between the corn and ethanol sales to Japan and Brazil, the president is creating new markets for domestic farmers while exempting smaller oil refineries from the devastating impacts of the arbitrary renewable fuel standards,” Mr. Manning said. “There is no better salesperson for American goods than President Trump.”
Corn growers, farm-state lawmakers and ethanol producers are complaining about the Environmental Protection Agency’s decision last month to grant 31 waivers for petroleum refineries from the requirement to blend ethanol for gasoline or buy credits for other refineries. They say the reduced demand has caused one ethanol plant to close, and the reduced demand for corn is hurting farmers at the same time they are losing business from the U.S. trade war with China.
Some in the biofuels industry are warning Mr. Trump that the losses could hurt him politically next year in traditionally Republican rural states. They have complained that the waivers for refineries show that Mr. Trump is favoring the petroleum industry.
Purdue University’s Ag Economy Barometer survey of 400 agricultural producers reported Tuesday a decline of 29 points in August to a reading of 124, slightly below the level in June. The percentage of producers who don’t expect a positive outcome of the China trade war for U.S. agriculture rose from 19% in July to 25% in August.
Mr. Macchiarola, API’s head of downstream and industry operations, said the petroleum industry agrees with farmers that the administration should resolve its trade wars, rather than revise the requirements for biofuels production.
“The administration should reexamine its trade policy, this issue around tariffs, trying to offset one bad policy by adopting another,” he said. “One bad policy does not offset another bad policy. It’s not the way to govern.”
In comments submitted to the EPA late last week, API said the consumer market for cars isn’t matching the government’s 10-year-old projections for biofuels consumption. The trade group said it is particularly concerned about any move by the administration to increase the ethanol “blend wall.”
“The majority of light-duty vehicles on the road today were not designed and warranted for ethanol blends above 10%, and there remain serious vehicle and infrastructure compatibility issues with blends above 10%,” the group said. “The increases in gasoline demand that were projected at the inception of the RFS [Renewable Fuels Standard] have not materialized, nor has the commercialization of cellulosic biofuels progressed at the rate Congress envisioned in 2007.”
API added, “The statutory volumes set in the Energy Independence and Security Act of 2007 are unattainable and maintaining these mandated levels could result in fuel supply disruptions that harm our economy.”
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