Ethanol fight divides key groups in Trump’s base

President Trump may soon have to decide which group of supporters he likes more: farmers or the oil and gas industry.

The escalating standoff between ethanol producers and the oil and gas industry is shaping up to be a case study in the challenges of trying to satisfy competing interests in one’s political base. And the administration’s moves during August only antagonized each side further.

{mosads}President Trump’s recent decision to exempt some oil refiners from adding ethanol to their fuels spurred a backlash from corn farmers, prompting the administration to attempt to placate the loyal group of supporters.

“The Farmers are going to be so happy when they see what we are doing for Ethanol, not even including the E-15, year around, which is already done. It will be a giant package, get ready! At the same time I was able to save the small refineries from certain closing. Great for all!” Trump tweeted on Thursday.

But as far as refineries are concerned, it’s not great for all.

The oil and gas industry has been especially vocal in opposing an awaited proposal from the White House that aims to bolster ethanol producers.

“You have indicated that you would like to find win-win solutions,” industry groups wrote this week in a letter to Trump, arguing that his overture to farmers is anything but advantageous to both sides.

{mossecondads}The letter was signed by The American Petroleum Institute (API), which represents oil and gas companies, and the American Fuel & Petrochemical Manufacturers (AFPM), which represents oil refineries.

“It’s never over til it’s over with this administration,” AFPM President Chet Thompson said in a recent call with reporters. “So what we’re going to keep doing is share our views and hopefully convince the president.”

Those oil and gas groups represent a big part of the “energy dominance” strategy the president often promotes. But Trump’s actions on ethanol — allowing for year-round use of high ethanol E-15 fuel and vowing to reconsider waivers for refineries — show he considers those farmers an important part of his base, too.

Geoff Cooper, president of the Renewable Fuels Association, which represents the ethanol industry, said almost every county that’s home to the nation’s 150 or so ethanol plants voted for Trump in 2016.

“Clearly, the geography of the ethanol industry here in the Midwest has been part of the president’s base,” Cooper said. “But I think there has been a feeling of whiplash or ping pong when it comes to this administration’s overall stance on the renewable fuel standard and biofuels.”

Rep. Cindy Axne (D-Iowa), who helped organize a response from farmers after Trump issued the waiver, said the administration’s policies thus far have benefited wealthy oil companies. Though a new package could be an improvement, she said she doesn’t buy Trump’s public concern for the plight of farmers.

“His track record does not show that he cares about Iowa farmers unless he thinks his ratings are going down. So I’ll believe it when I see it,” Axne told The Hill.

The 31 waivers issued to refineries by the Environmental Protection Agency (EPA) on Aug. 9 set off a firestorm among Iowa farmers. Trump had promised he would review the ethanol waiver program during a visit to the state earlier in the summer, but just two months later he gave the go-ahead to EPA to issue the waivers to small refineries who had applied for hardship exemptions.

Iowa farmers staged a press conference to blast the president for reneging on his promise, and some ethanol leaders expressed regret over voting for Trump.

“Farmers that were already feeling pain from the trade war and lost export markets were very angry and frustrated when those exemptions were announced, and in many cases it was the straw that broke the camel’s back,” said Cooper. “The last few weeks have been an attempt to try and put the genie back in the bottle.”

Since then the president has been hinting at a fix for farmers that’s expected to include a large increase in the amount of ethanol refiners are obligated to blend into their fuels.

“We view this mandate itself as a middle ground,” Frank Macchiarola, vice president of downstream and industry operations at API, told The Hill of the current requirement to blend in ethanol.

“The burden gets higher every year. It was supposed to be a mandate that would drive the market for a product and then go away. A decade and a half into the program we need more clarity without these back-and-forth swings basically at the whim of the ethanol industry every time they call. Does this mean every time there’s a small refinery exemption we should revisit the entire policy?”

Even the ethanol industry sounds cagey about Trump’s plan.

They want the EPA to enforce the part of the law that requires other refineries to blend in the gallons of ethanol the companies who received waivers excluded from their product.

“This isn’t a big gift to the ethanol industry. It’s not a big gift to farmers. It’s just enforcing the law on the books,” Cooper said.

The other ideas being floated by the administration align with the ethanol industry’s long-term goals, but the industry needs immediate relief, Cooper said.

“Those are all great. Those are all nice to have policy changes. But they’re geared more toward the long term and what we’re focused on is having no more ethanol plants shut down,” he said.

If there’s a middle ground solution here that would please both sides, it’s not immediately clear what that would be.

AFPM pointed to a 2018 bill that would require higher octane levels for gasoline — something that can be achieved with ethanol.

“When fully understood by all parties, everyone would see this as the honest to goodness win-win the president has been looking for,” Thompson said. “I don’t think they need to take a side.”

But Cooper said ethanol producers didn’t find that same bill workable because it would end the obligation to use ethanol while creating higher octane fuel can be achieved with a number of additives and processes.

He also knows that Trump’s plan — which could come days or weeks from now — may be heavily influenced by the oil and gas industry before it’s rolled out.

“We’re not taking anything for granted, of course, and I’d say on our side we’re being cautious about all this as well ‘cause they’re right,” Cooper said of the oil and gas industry. “Until we see something in writing and it’s official, we’re going to withhold our enthusiasm.”