President Donald Trump’s decision to waive requirements for some small refineries to blend ethanol with gasoline has local ethanol officials furious and saying Trump may have lost the support of rural voters.
“I’m just livid,” Elite Octane President and CEO Nick Bowdish said Monday. “The president went to Washington D.C. to drain the swamp and he’s really become the swamp. The only person that’s won here is Carl Ichan who got off not having to comply and saving about $190 million because he’s president Trump’s friend.”
Last week, Trump directed Environmental Protection Agency (EPA) Administrator Andrew Wheeler to approve waivers for 31 small refineries that claimed blending ethanol with gasoline would have caused them “disproportionate economic hardship.” This is the third year the EPA has granted similar waivers, a move that biofuel officials say has reduced demand by 2.6 billion gallons while last week’s action reduced demand by an additional 1 billion gallons.
Midwestern politicians and producers shared Bowdish’s outrage with Iowa Senator Charles Grassley saying the EPA “screwed” farmers with the action.
“I’m really happy Sen Grassley is out being as pointed as he is saying President Trump just screwed the farmer,” Bowdish said. “Everybody in Cass County and within 300 miles of Cass County, needs to understand that. This is absolutely ridiculous that multi-billion dollar corporations would be given a free pass to use renewable fuels because of somehow twisting up an economic hardship to blend a fuel (ethanol) that today is $1.25 a gallon into gasoline that is still, wholesale, well over $1.50. It is just capital cronyism at it’s best.”
“Three years in a row, under president Trump’s leadership, he’s decimated this program and I just think it is so disingenuous that he would come out to Iowa and brag about how he loves ethanol and he’s for the farmer — and then to go back and do this. People wanted to give him some room and say that was his EPA administrator Scott Pruitt and he fired him. But now clearly, clearly in the last week president Trump was personally involved and made this decision and it’s very, very discouraging for everybody in agriculture.”
In the end, Bowdish says, the action is part of a pattern that will affect not just ethanol producers, but anyone involved in agriculture.
“Eventually how this all unfolds is that every person who is growing corn and soy, every persons that owns land and gets paid a cash rent payment — the economics of what is processing almost 40 percent of the production in Iowa — the economics are getting so bad that these plants are just going to stop using this corn. And the corn is going to backup in the country and it really doesn’t matter that we just had the toughest spring in many generations and this corn crop maybe isn’t going to be a record. That’s not going to matter because president Trump is destroying demand both our export markets and now at home.”
Under the federal Renewable Fuel Standard (RFS) program, refiners are required to blend biofuels into the nation’s gasoline pool, but small operations that produce less than 75,000 barrels a day, can apply for exemptions if they can show they would suffer financial hardship due to the requirements. But opponents point out that some of those “small refineries” are owned by large multi-million dollar companies including Exxon and Chevron.
The issue has become a major dividing line between petroleum and ethanol producers, a fight some say has now been decided by the president.
“It really just comes down to the fact that the oil lobby has been more successful than the corn lobby to get the ear of the president and get him to take this position which loosens the enforceability of the renewable fuel standard, so they can sell more petroleum products and use less ethanol and less agricultural products,” Bowdish said. “This is not a republican or democrat issue. This is rural America against the largest oil corporations in the world. And the president just picked the largest oil corporations in the world.”
Locally, Bowdish says, Elite Octane has not cut production — largely due to it’s relatively new, modern and efficient plant. But other ethanol producers may not be so lucky.
“Our plant is still making the same amount of gallons every day — but our economics, both at our facility and facilities all across Iowa are hovering near break-even,” he said. “We consider ourselves one of the more efficient plants in the industry — for those plants that don’t have that same structural efficiency — their economics have gotten so bad that they are beginning to shut down like the plant in Merrill Iowa.”
In July, the Merrill plant suspended production citing the absence of a trade deal with China and a pull back in production. It is one of at least 10 in the country that have temporarily shut down and ethanol producers — who at one time hailed Trump for reversing a federal law that allows the sale of a 15 percent blend of ethanol year-round — may now be taking a closer look at the Democratic challengers.
“At the end of the day, if we don’t like this then we have to look at what’s our alternative. With more than a dozen candidates running for the Democratic ticket, there are certainly some of those candidates that understand agriculture -somebody like a senator Amy Klobuchar from Minnesota. I think it really depends on who the Democrats pick to put up against the president,” Bowdish said, adding, “I think people are listening intently, at least the independent voters are, to what is the rural vision for some of these other Democratic candidates running for president.”
“A lot of us really want to support him, taking on China and we like what he is doing there, but if you’re going to use agriculture in that discussion and ask agriculture to take one on the chin you sure would think you would do everything you could to help agriculture succeed at home. Clearly a week ago Friday, he just poked us right in the eye.”