Trump Allows For Expanded Ethanol Sales As Chinese Tariffs Squeeze Farmers

From The Daily Caller

Michael Bastasch | Energy Editor

The Environmental Protection Agency (EPA) announced Friday it would allow the year-round sale of higher ethanol gasoline.

EPA Administrator Andrew Wheeler said the agency was fulfilling President Donald Trump’s promise to Midwestern agriculture states, which have been hit hard by retaliatory Chinese tariffs.

EPA previously restricted the sale of “E15” gasoline — fuel blended with 15 percent ethanol — in summer months over air pollution concerns. Wheeler also announced transparency measures to comply for the Renewable Fuel Standard (RFS).

Midwestern lawmakers and agriculture interests cheered the news as a way to expand corn sales, which are expected to take a hit this year as China cuts U.S. crop purchases. (RELATED: Trump’s Tariffs Put Mexico In A Tough Spot. Here’s How They Could Retaliate)

“We’ll see an increased demand for corn, thus creating an economic booster for our state’s growers,” Iowa Republican Sen. Joni Ernst said in a statement.

Sen. Joni Ernst (R-IA) asks a question as U.S. Attorney General William Barr testifies before a Senate Judiciary Committee hearing on Capitol Hill in Washington

U.S. Senator Joni Ernst (R-IA) asks a question as U.S. Attorney General William Barr testifies before a Senate Judiciary Committee hearing on Capitol Hill in Washington, D.C., U.S., May 1, 2019. REUTERS/Aaron P. Bernstein.

Corn exports are forecast to fall $1.4 billion this year, according to the U.S. Department of Agriculture (USDA). China was also the third-largest destination for U.S. ethanol exports, but that trade stopped in response to tariffs on Chinese goods.

“We kind of look at it as a key that finally unlocks the door to greater demand opportunities in the long term,” Geoff Cooper, chief executive of the Renewable Fuels Association, told The Wall Street Journal.

“I’d characterize this as a shot in the arm, but the farm economy and the ethanol industry are still very sick,” Cooper said.

The Trump administration has offered $28 billion in aid to farmers since 2018, including $16 billion in direct payments approved in May.

However, Trump’s appeasing agriculture interests did not go over well with refiners, environmentalists and conservative groups that have long opposed year-round E15 sales.

Environmentalists warn that selling E15 in summer could exacerbate smog pollution in parts of the country. Though, E15 supporters say higher biofuel blends improve air quality through lower tailpipe emissions.

U.S. President Donald Trump meets with China's Vice Premier Liu at the White House in Washington,

U.S. President Donald Trump meets with China’s Vice Premier Liu He in the Oval Office of the White House in Washington, U.S., April 4, 2019. REUTERS/Jonathan Ernst.

Conservatives added that E15 is damaging to small engines found in outdoor equipment, like in lawn mowers, ATVs, jet skis, boats and motorcycles.

“I hope Joni Ernst and Chuck Grassley know how to fix small engines. Everyone should send their ruined equipment to them,” Dan Kish, distinguished senior fellow at the Institute For Energy Research, told The Daily Caller News Foundation.

Refiners have long opposed the federal biofuel mandate, which holds them financially accountable for compliance. The RFS was initially passed in 2005, but expanded in 2007 to mandate ever-increasing amounts of biofuels be blended into the fuel supply.

Purchasing credits, or RINs, to meet RFS mandates costs refiners billions of dollars. The American Fuel and Petrochemical Manufacturers (AFPM), which represents refiners, said it would sue the Trump administration.

“EPA has left us no choice but to pursue legal action to get this unlawful rule overturned,” AFPM president Chet Thompson told WSJ.

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63 thoughts on “Trump Allows For Expanded Ethanol Sales As Chinese Tariffs Squeeze Farmers

    • Yes, why not drop it to 10% year round for a start and then drop it 1% each year ? Less damage to farmers per year as they switch crops and slowly less damage to engines….

      • I guess they have not paid much attention to what is happening in the corn growing regions of the country this year.

      • Beer brewed with corn is not the best quality. Usually done but the cost of using malted barely.

        Though, E15 supporters say higher biofuel blends improve air quality through lower tailpipe emissions.

        The eternal lie of confounding air pollution and CO2. Firstly the reduced CO2 is only an accounting trick because the CO2 from corn ethanol does not “count” as CO2 emissions. It is still there in your tail-pipe.

        Apart from that blatant stupidity, even if you did reduce CO2 from the transporation, it would not improve “air quality”, since it is not toxic or hazardous.

    • “Ethanol is a bad fuel…grow food crops…”

      I agree with you Walter – in general, biofuels are uneconomic and environmentally destructive – all over the world.

      I was CEO of an oil-and-gas company and “inherited” a corn ethanol plant in Wyoming, complete with huge federal and state subsidies – and it still only broke-even.

      Excess irrigation withdrawals for corn ethanol also cause extreme drawdown of the vital Ogalalla aquifer, a very serious problem for the USA and the world.

      Objective:
      How does the USA make a sensible change from the current corn ethanol debacle, without causing legislative and market carnage?

      Situation Analysis:
      1. Atmospheric CO2 is not a pollutant – more CO2 is better for humanity and the environment.
      2. The next natural climate cycle will be moderate global cooling, starting anytime now (as we predicted in 2002).
      3. Moderate global cooling will cause more frequent grain crop failures and food shortages, as experienced in the 1960’s and 1970’s.
      4. Fully ~40% of the huge USA corn crop is processed to produce corn ethanol.

      Proposal – Draft 0:
      a. Eliminate all fuel ethanol mandates and subsidies over 3-5 years.
      b. Ensure there is adequate secure grain storage facilities for approx. one year of production, perhaps more.
      c. Shift most current corn-for-ethanol production to food grains that require less water.
      d. Take steps to prevent commodity price crashes due to possible over-production:
      – for example, have the US government purchase excess food production and distribute it to starving nations, in containers marked “Gift of the USA”. This will cost less that the current policy, and actually do some good.

      This is a before-coffee first cut at a better policy that the current USA corn ethanol nonsense – I’m sure it can be improved. Instead of the usual negative responses from the usual suspects – kindly suggest major improvements.

      Regards, Allan

      • I can get behind Proposal Draft-0 point (a) since the Fe’ral government has no Constitutional basis for dictating means of production.

        For the rest, I trust you find clarity in your caffeine.

        point (b) can be better handled through market forces.
        point (c) dittos. If there isn’t a market for corn-for-ethanol production, then businesses can alter their plans.
        point (d) this is an absolute No-Go. whenever you have a government pledging your taxes and future income, without limit, to cover shorts in the commodity market (one that has been around since the dawn of human history) then you are absolutely guaranteed overproduction since there is no down-side to overproduction since the Fe’ral government has already used its police powers to guarantee that there is a ready buyer.

        • There absolutely is a market for corn-for-ethanol production: bourbon, whose production is accelerating, corn whiskey (a niche product, but delicious stuff!), and even vodka (Tito’s is the poster drink, which is quite popular for some reason. I think it’s dreadful swill, and prefer wheat vodkas, especially Russian Standard). Byzantine laws and regulations tamp down the expansion rate of this market, which would be much, much larger without.

          The price of these products is closer to an actual market-based price. Based on (unsubsidized, and, in fact, negatively subsidized) beverage prices, a corn-based ethanol is way, way too expensive to be a fuel, or even a fuel additive. But a corn-based ethanol has a huge market.

      • Allan Mac

        You know I am usually a supporter of all you write, however I must take issue with the idea of giving free food to other countries. Let me use Mexico and Mozambique as examples.

        The recent collapse of the Mexican agricultural sector and the loss of hundreds of varieties of corn was caused by NAFTA permitting the US to dump corn below the local cost of production, driving many thousands of Mexican farmers out of business. Much of the drive to leave the rural areas is cause by corn exports from the USA.

        In Mozambique, recently the second poorest country in the world, suffering from decades of Communist mismanagement, needs to dramatically increase their food production. One thing they did was offer Zimbabwean large scale farmers, some of the best and thriftiest in the world, 5000 ha if they employed 5000 people within 5 years, provided they built their own schools and handled security. Scores took up the offer and fled Mugabe.

        How will they be brought to naught? By importing free food from somewhere else, destroying the local market. Swaziland sets a viable local price to keep farmers in business and taxes imports.

        Developing countries are filled with people who know how to farm. The problem is, for certain crops, dumping the overproduction from rich countries. Milk from the EU is bankrupting the entire dairy industry in South Africa – a place with millions of cows. It’s ridiculous.

        Overproduction in the US and dumping the product in developing countries driving their own producer-population into bankruptcy is supposed to be illegal under the WTO.

        I agree with the idea of strategic food reserves for the world (which functionally there does exist some coordination) and it should be supplied where there are failures (political or natural).

        The world is not short of food. Starvation is usually political in origin, often caused by the impotence of the UN to stay the hands of oppressors.

        The ethanol story in the US is laughable from an energy input point of view. Fertilizer, production and processing uses more energy (all fossil) than it produces in ton-miles of objects moved. If marijuana was legalised all Mexican production would localize to the US with economic benefits in the billions. Why feed the cartels if it is consumed anyway?

        Lastly, if ethanol was used in a power station (a rapid start compensation station) vehicles would all get better fuel mileage. They should create an ethanol performance standard that requires a positive EROEI, say 50% or better.

        • Good points thank you Crispin.

          One reason I post before coffee”” is to get such feedback, and to have a good excuse for my oversights.

          Repeating my Objective:
          “How does the USA make a sensible change from the current corn ethanol debacle, without causing legislative and market carnage?”

          Suddenly dumping 40% of the huge USA corn crop onto the market would cause market chaos in the USA and all over the world.

          Normally I prefer free-market solutions, but this one is different – definitely “bigger than a breadbox” – and requires some serious thought.

          Also, hardly anyone is thinking about the consequences of moderate global cooling, especially regarding declining food crops and growing energy requirements. While imminent cooling is not a certainty, it is more probable than more warming, imo.

          Best, Allan

      • Probably going to be moot. The 1.4 billion of corn probably won’t be there at harvest time, so it won’t go into EtOH production. The bad weather in the midwest is looking like a major threat to corn production. The biggest production areas have about two weeks to plant, if the field have dried out, or they risk losing in the fall. Given the cooler, wetter likely again this year harvest season is liable to be a tough time both for finishing the corn(hot dry weather) and getting into soggy fields.

        • Philo wrote:
          “The bad weather in the midwest is looking like a major threat to corn production.”

          Thank you Philo – I’ve been reading about this bad planting weather in the midwest this year.

          As I recall, there was a very late Spring in the midwest last year , but the excellent summer weather made up for that.

          Could these be early signs of the imminent global cooling that I (we) predicted in my Calgary Herald article published 1Sept2002?

          I hope not! I’m getting old and hate the cold!

          Best, Allan

  1. Biofuels should have subsides removed. In fact all government subsidies distort markets. Let the free market decide who wins and who loses. Ethanol is tough on older engines and lawn mowers etc. Last summer upstate New York There was a station nearby that had off road diesel as well as ethanol free gasoline available. I haven’ Checked this year yet.

    • Here in Eastern Arkansas we have one station I have used for last six years that has ethanol free premium gas. All of my gas powered tools have run wonderfully as well as my 1988 Ford Ranger that gets 21 mpg. Of course it cost much more, which is a downside.

  2. Like a row of Dominoes, consequences roll on.

    Discussions are underway. That’s the good news.

  3. Corn fuel kickback. I hate that ethanol in gas. I’d pay more to get ethanol free gas. A few states allow that. Arizona isn’t one of them due to Phoenix winter time airpollution.

    • Michigan does allow it, it’s the only thing I use in my high-performance snow-blower, which I have because we also have a real winter.

      • When I was in Iowa when winter came to take care of the lawnmower I was suppose to empty the fuel tank then throw in a cap of “stabilizer” which was suppose to remove moisture. Turns out the stabilizer is pure ethanol.

        Yes the engine damage angle is quote overwrought – unless the device was purchased 40+ years ago. Otherrwise the problem has been solved the ethanol actually acts to remove moisture and remove various residue buildups

        • re: “throw in a cap of “stabilizer” ”

          THAT’s not a par with 10% of the volume is it though “mate”?

          Innumeracy at its best.

          • I checked my Stabil down in the garage and it is not ethanol at all, not sure what he is using for “stabilizer”. I had 1/2 a two gallon can I bought last October, ethanol included, and it looked like orange gatorade when I went to use it a couple weeks ago. Forgot to put the Stabil in it. Had to buy it local for my last mowing, dumped it made that run for real gas same day.

          • Ethanol is bad for the environment and economy for many reasons – but engine damage is not one of them.

            You don’t have to lie about something when the truth is mostly on your side. As for the fuel I used – of course it is also 10% ethanol. It is difficult to get anything else in Iowa – well unless you want 85%>

          • Sorry, wrong, ethanol is bad for motors. Always has been and always will be. Quibbling about degrees of bad is pointless.

          • I have had access to E0 for a long time, Do other states ban selling it? I use it primary in all my small engines. NY state maybe crazy but at least we have E0 fuel.

        • You don’t have to lie about something when the truth is mostly on your side

          so don’t lie marque2. The fact remains that gas with ethanol damages engines more than gas without ethanol. period.

        • When I was in Iowa when winter came to take care of the lawnmower I was suppose to empty the fuel tank then throw in a cap of “stabilizer” which was suppose to remove moisture. Turns out the stabilizer is pure ethanol

          What was the name of the “stabilizer” brand? because frankly your “pure ethanol” claim sounds like BS. If your gas already has ethanol in it (to the tune of 10% of volume) as you admit it has, than “thow(ing) in a cap” more of “pure ethanol” won’t make a blind bit of difference. No need to “throw in a cap” of pure ethanol when you already have much more ethanol than that from the 10% that’s already in the tank.

      • Thanks. Good info, now in my favorites.

        I was getting ready to buy 15 gallons to fuel my ATVs and prep the snowblowers for summer storage. Looks like Maverick is the place to go in my area.

      • Thanks for this link! It shows 4 stations in our area, been buying direct from a distributor. Probably the same distrib who delivers to those stations. It is a pain hauling the drum in the van and only get 25 gallons at a time, lot easier to just use my gas cans.

  4. The best way to use that ethanol crap to save on fossil fuels is to burn it in specialized power plant turbines. It would have to be subsidized to compete, so that would keep our legislators happy.

  5. “Allow” = good; “Require” = bad. But you can be that it will become the latter.

  6. Notice how they always miss the corn users in the U.S. and what they pay in feed. Ever heard of chickens and hogs?

  7. I thought it was so wet this year that they were having trouble planting the corn so there might be a corn shortage which of course would raise the prices. Who knows!

    • Yes, exactly. When we’re seeing the worst corn planting data in a century or more, it might not be a good idea to be diverting corn into fuel…

  8. I’d agree from experience that small, carburated engines do not do well w/ethanol gasoline, tho fuel-injected engines don’t seem bothered. Nor does the ethanol gas stay “fresh” for long.

    • Add 2 stroke oil …. 60:1 works for me and my 1949 tractor …
      and for my small gas engine powered equipment .

  9. Midwestern lawmakers and agriculture interests cheered the news as a way to expand corn sales, which are expected to take a hit this year as China cuts U.S. crop purchases. Corn crop yield will be low this year due to flooding in mid-west.

  10. While I HATE ethanol gas, though my small engine repair guys makes good money from its use, Trump has little choice on some of the decisions he is required to make. The China trade talks are a really BIG deal. Right now the Chinese leadership is playing USA politics by reneging on their original deal. Imagine if the Democrats were truly reasonable and intelligent people and supported Trump fully, how quick the Chinese, the Iranians, etc would come back to the table. The Chinese are dreaming of a Democrat President and Senate. If Trump loses farm states he loses the 2020 election and then we all lose.

    • I agree, the ethanol “program” has been in place for so long now that Trump can’t stop it — prb’ly no one can presently. It’s a juggernaut.

  11. How about this, keep that crap in Iowa and the other states that lobby for it. Let them use as much of it as they want but keep it out of states that don’t want to give money to corn farmers for the sake of having corn farmers.

    • Brent,
      Yes – the communist chinese mask is slipping. Their true motives of world hegemony are becoming apparent, as many of us have warned of over the past few years.
      Their Belt and Road Initiative is financial and resource war.
      Their conversion of coral reefs in the South Asian sea to arms bristling military bases is territorial war.
      Their unfair trade practices are economic war.
      Their theft of technology is intellectual property war.

      The chinese are already at war with the USA and our allies, but much of the USA lives in denial of this reality.

    • The thing about tariffs & a trade war w/China is that other sources for present Chinese goods can be found/created elsewhere (even domestically) in a reasonable timeframe. Even rare-earth minerals are available right here in N America if we’re willing to extract them.

  12. The Midwest crop this year is headed for extraordinarily low production as 10 million acres don’t get planted because of wet soils. This means that supply WILL NOT be high enough to cover demand and prices are going higher.

    This might have been a good idea the last several years but the timing could not have been worse to increase demand that can’t be met with this years crop!!!

    Prices have already jumped from $3.42 to $4.28 and plenty high enough for farmers to do very well. $4 in fact is a great price. Corn prices are going higher and this will cause them to spike even higher.

    Very bad plan……..increasing the demand for a horrible fuel at the worst time possible.

    • The Midwest crop this year is headed for extraordinarily low production as 10 million acres don’t get planted because of wet soils. This means that supply WILL NOT be high enough to cover demand and prices are going higher.

      its almost like God is helping Trump with the Chinese Tariff negotiations.

      “Donald, don’t worry about the reduced Chinese demand for corn, I’ve already put in place a reduction in production.”

  13. I guess strategically giving tariff tax money to farmers for ethanol grain works for now…but eventually we need to wean farmers off the stupid ethanol fix.

    The lefties can’t cry against this since ethanol is (stupidly low %) renewable energy…and nobody can piss off Iowa farmers in an election year.

  14. Green things never fail to bite the hand that feeds them.

    Years ago they started the craze for an expensive to produce and bad fuel. Just how bad ? Corrosive, absorbs water, burns badly. Per weight, about half the energy content of kerosene. Nothing I’d want in my tanks.

    An artificially created regulatory subsidized context for those able to grow corn outside of the reasonable limits.

    A perfect example on how forcibly created markets are nefarious to the sovereignty of the state that supports them.

    Without the ethanol insanity, Mr. Trump would have had a stronger political arsenal in the global economy.

  15. This is a rare Trump mistake. The E10 blendwall made technical and economic sense for two separate reasons. First, ethanol is an octane enhancer (just like its groundwater toxic predecessor MBTE) so enables more good gasoline refinable from crude oil. Second, it is an oxygenate that reduces NOx. The E10 blendwall was set to equal premium octane in LA summer to minimize smog. That is why the actual blend varies by season (pumps say ‘up to E10 for a good reason). And all cars were engineered to handle E10.

    Anything more is just farm politics. Plus most existing cars cannot handle more than E10 unless designated E85, and will develop problems just like small engines (lawn mowers, chain saws, older motorcycles).
    Disappointing politics inspired move.

  16. We have been burning food for years by government mandate.
    This year something has changed. (1) A lot of the corn the farmers planned to sell this year has washed away. (2) A lot of farmland previously planted with corn by now is under water. (3) The spring calving season has not occurred at many farms with wet grazing land.
    Corn is a food. Expect corn and beef prices to double within the year. And we’re burning food? How dumb is that.

  17. A few points for clarification:

    World food production exceeds demand. (Corruption leads to inadequate distribution of food in some areas.) Therefore, no need to replace corn for fuel production to food production…..The vast majority of American corn is field corn– used for animal feed, corn syrup and industrial uses, not the sweet corn humans eat….If Chinese willingness to buy American corn (or pork or soy) is reduced, they’ll still need to buy it from someone (we’re not talking caviar here). They will still buy our stuff. It’ll just go thru a middle man first, short sighted analysis or disingenuous argument for political benefit notwithstanding. The US exports as much grain as the next 9 exporting nations combined. Only we have to the production capacity to fill the demand of importing nations. ….Although I’m a card-carrying libertarian and hate to say it: we have to face the problem of food security– Most of us don’t have the capacity to grow our own, so we need to ensure that the professional farmers can stay in business, which means some form of communal (govt) support. Corn for fuel is a poorly disguised & inefficient way of doing that.

    BTW- ethanol in fuel does not harm engines. It does accelerate oxidation/degradation of soft rubber parts such as the cheapo, inefficient diaphragm style carburetors used on small engines—easier & cheaper to just drain the carb for storage than to apply better but bigger “real” carbs on the little engines.

    • Ethanol does harm engines.

      First by absorbing moisture it degrades the fuel system from tank to carb, this is more of a problem in high humidity areas than dry. Mostly not in the new automotive industry because they’ve adjusted car builds since the ethanol mandate. Use of aluminum, plastic and seals that can handle ethanol in fuel systems fix the problem. Outside of the automotive industry it’s a different story. As an example our local news had a report on how much damage is being done to marine engines this last fall. They were talking about having to rebuild fuel systems every couple of months with the use of ethanol fuel (no ethanol free fuel for sale at the local marinas).

      Second is ethanol not only degrades seals not designed to handle ethanol it can also cause them to swell. That swelling can stop a “cheap” carb (think needle valve using an o-ring seat) from operating in just a single use. And no, just draining that cheap carb after each use will not save those seals, it might prolong usage before a rebuild is required.

      While technically this damage is not occurring to the “engine”, it’s disingenuous to claim fuel systems are not part of the engine.

    • That’s a bit premature and a bit convenient, don’t you think? Maybe check the CIA Factbook fore a second opinion.

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