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Will Trump and Pruitt End Our Biofuel Nightmare?

America’s biofuel mandates occupy that rare policy sour spot, where they look horrendous no matter how you look at them. Regular readers will be well acquainted with this nightmare at this point, but here’s a quick run-down: the Renewable Fuel Standard (RFS) started as a Bush-era regulation required U.S. refiners to blend increasing quantities of ethanol into their fuel, and the Obama administration dutifully carried out this regime during its eight years. During that time, we learned that these quotas were: raising global food prices and starving the world’s poor; costing Americans billions of dollars every year at the pump; wreaking havoc on the environment; opening up new avenues for shady Wall Street chicanery; and making business a lot more difficult for American refineries. So what will Trump do about this mess?

It’s a difficult question to answer, because corn country was part of the reason President Trump was elected. Like many candidates before him, Trump backed ethanol quotas on the campaign trail as he worked his way through Iowa and the midwest. But one of Trump’s advisors, the billionaire magnate Carl Icahn, has been pushing for Trump and the new EPA chief, Scott Pruitt, to drop this support and walk away from these quotas. Bloomberg reports:

Scott Pruitt, who got the EPA administrator job, seemed to agree that the rule should be changed, Icahn said last week in an interview at his New York office. Icahn was disappointed with what he considered Pruitt’s scant knowledge of the issue during their first meeting, in November, but said he was satisfied after another meeting and additional phone calls.

Icahn’s motivations are as obvious as they are self serving: he owns refineries that are, as we mentioned above, struggling to deal with the RFS, and he wants to save money (or perhaps make more of it) by bringing about a swift end to these mandates. It wouldn’t be a great look for Trump to be swayed by an advisor’s personal financial stake in a policy change, but in this case, we wish Icahn the best of luck.

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  • FriendlyGoat

    It is hard to imagine this Congress and this president doing anything which diminishes either the price/demand for corn or the processing of ethanol. Neither Icahn nor Pruitt are the point. The politics of “Corn Country” is the point.

    • Proverbs1618

      Then why didn’t Barack Obama and the Democrats tackle this problem in 2009 when the Democrats had the majorities everywhere as well as White House? Oh that’s right…. We must blame the evil Republicans for everything. Sorry, I forgot…. Carry on…..

      • ვეფხისტყაოსანი

        Why, because the saintly Democrats are committed to appearing to save the planet. And if the evil Republicans get rid of the mandate, it will be solely because of their nefarious commitment to rape the planet for profit. (Never mind that nuclear is the most effective non-carbon-producing power source and that fracking has done more to lower American CO2 emissions than everything else the Democrats did over the past 8 years combined.)

      • FriendlyGoat

        There are some Republicans out there who understand that it’s time for ethanol to go back out of gasoline. But, I’m just saying that the politics of “Corn Country” will likely prevent this from happening. The smaller number of “corn” Democrats couldn’t do it if they had wanted to and, now, the larger number of “corn” Republicans can’t do it. Corn is driving large rural areas of a bunch of states.

        • mikekelley10

          Anyone who works on chain saws, lawn mower, and weed eaters can tell you that ethanol in gasoline will cause big problems.

          • FriendlyGoat

            Yes. And we now know that ethanol is not really a net positive for the environment either.
            But “corn country” has its nest feathered from this stuff, and that is why taking it back out of gasoline seems unlikely to me at this time.

  • Jonathan Dembo

    American Interest needs to get its story straight. Just this past Sunday, American Enterprise pointed out that using biofuels in jet engines would have a dramatic positive effect on global warming by reducing the amount of carbon particles in jet aircraft contrails. That seems to be an argument at least partly in favor of biofuels. Maybe there are other positive results of biofuels. I can think of one. The reduction is corn surpluses raises the world price of corn and thereby helps poor, small farmers all over the world. American crop surpluses have been the single most important cause rural poverty in Africa, Asia, and Latin American and thus the single most significant factor forcing farmers off their land and into urban slums where poverty, lack of hope, and joblessness, foster crime, religious and political radicalism, and mass emigration. Subsidies for biofuels can have a dramatic impact in reversing these world wide trends. It is much cheaper in the end to subsidize biofuels than to fight the results of rural poverty directly.

    • ვეფხისტყაოსანი

      Biofuels fit for jets are not, and cannot be, ethanol.

      Poor, small farmers eat their production; they are, at best, a very small part of the corn market, unlike their compatriots in dense urban conclaves, who most certainly are, and therefore suffer the effects of the ethanol mandate. Mexico, the country most affected by American crop policies, has seen more than half of its rural population move to cities over the past three decades; it’s now 79% urban.

      Even with the best will in the world, it’s very hard to grow noticeable amounts of corn in Mexico City.

      • Jonathan Dembo

        Your first argument is with the American Interest not me. I simply pointed out that they are arguing both sides of this issue. Poor farmers eat their crops because they cannot sell it so long as the US will practically give it away. Nobody will pay money for something they can get for free. Poor farmers can’t pay the rent or pay taxes because nobody will buy their crops, and they lose they lands and move to the city. In Egypt, for example, the government gives bread to the poor that it got from US aid. If the cost of US corn were to rise, the world price would rise, and the Egyptian government would have to pay Egyptian farmers to get grain for bread. In Mexico, the low cost of US corn is what has led to the massive flow of Mexicans to the Capitol and to the US. Mexican farmers, like those in Egypt cannot compete with American producers. Higher American corn prices would help slow the flow of Mexicans off the farms. Nobody is suggesting that the Mexican grow crops in Mexico City; but if Mexican farmers could get more more for their crops, they would be able to buy more from the cities, and the unemployed poor in the cities might be able to get jobs.

  • Charles Martel

    The only way to make this really work is to subsidize farmers in a different manner in exchange for eliminating the biofuel mandate. Sure, it’s a pity that you have to buy your way out of stupid policies that have a really strong political support base, but that’s reality. Scattering cash from airplanes over Iowa would be a far, far better policy than what we currently have.

  • Angel Martin

    Multiple sources of supply for transportation fuels is critical, especially in wartime.

    There are too many armchair “libertarians” who don’t seem to realize that the freedoms they so jealously guard will be worth jack sh*t if America and its allies are defeated in a war.

    • mikekelley10

      Obama’s Administration forced the military to buy uber-high priced “biofuel”. I fail to see how that helped our military, since higher fuel prices lead to less training. These expensive fuels are also more corrosive:

      –Increased Expenses. Biofuels are disproportionately more expensive than conventional fuels. A gallon of biofuel costs $26, whereas the Department of Defense purchases diesel at about $3.60 per gallon. Many argue that this rate will decrease over time as biofuel production increases, but in the interim, the Navy’s readiness would be further damaged by wasting precious resources on biofuels that are seven times more expensive than the Navy’s conventional fuels—not including the increased maintenance costs.–

      • Angel Martin

        No, Obama’s $25/gallon bio-bunker fuel is an environmental mandate, not a fuel source diversification. It’s a boutique environmental gesture similar to Price Charles fueling his Aston Martins with surplus wine.

        Ethanol is highly geographically diversified fuel source (saboteurs would have to burn down every farm in Iowa vs blowing up oil wells). Ethanol refineries are two orders of magnitude less costly than oil refineries (so you can have lots of small ones, and they are easier/cheaper to fix when they are bombed). And the output of ethanol refineries is mostly trucked, rather than by easily sabotaged rail or pipeline.

        But the USA needs more than ethanol. Coal is the biggest source of hydrocarbon btus and a coal to transportation fuel conversion should also be a military high priority. But it should be many small conversion plants, not a few huge ones for easy sabotage.

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