Ethanol impasse persists after talks
Iowa senator tweets ‘no deal’ amid effort for common ground
Efforts by Sen. Ted. Cruz to find relief for refiners from the high costs of meeting ethanol mandates hit a wall as Midwestern senators reject his proposals at a White House summit.
WASHINGTON — Efforts by Sen. Ted. Cruz to find relief for refiners from the high costs of meeting federal ethanol mandates hit a wall Tuesday as Midwestern senators rejected his proposals at a White House meeting aimed at finding a compromise.
Cruz has proposed capping the prices of credits that refiners must buy if they don’t blend ethanol themselves. But after a meeting with corn-belt lawmakers and President Donald Trump, Sen. Chuck Grassley, R-Iowa, tweeted “no deal.” Grassley later disputed Cruz's argument that the biofuels compliance system based on the credits, known as Renewable Identifications Numbers or RINs, was hurting oil refineries.
"We haven't had any reputable economist say RINs was the most important problem," Grassley said. "I pointed that out to the president today."
The ethanol mandates, known as the Renewable Fuel Standard was signed into law by former President George W. Bush in 2005, primarily as a way to reduce U.S. dependence on Middle Eastern oil. But as ethanol has taken a larger share of the nation's fuel supply, so too have the prices of the biofuel credits. Many refiners complain
that the market for the credits is thinly traded and subject to manipulation by Wall Street investors.
The owner of the largest East Coast refinery recently blamed its bankruptcy on the high cost of ethanol credits.
Cruz is urging the Trump administration to place a price cap on the credits. But Trump has told him he wants a plan that is a “win-win” for both the oil and ethanol industries.
Cruz had blocked a Senate vote on Trump's nominee for undersecretary of agriculture, Bill Northey of Iowa, in an effort to get action on ethanol policy. The Texas senator, however, removed that hold Tuesday in recognition of the Midwestern senators’ willingness to sit down with him and Trump. He maintained there was still opportunity to reach an agreement with the White House.
"This morning, we had a very positive and productive meeting on fixing the broken RINs system," Cruz said in a statement after the meeting. "I believe we are likely to arrive upon a win-win solution."
Also at the meeting were Senators Joni Ernst, R-Iowa,, and Pat Toomey, R-Pa., along with EPA Administrator Scott Pruitt and Agriculture Secretary Sonny Perdue, according to sources briefed on the meeting.
RIN prices for credits have increased in recent years, raising billions of dollars in costs on refineries across the nation. Cruz and Sen. John Cornyn, RTexas, the Senate majority whip, are working on prospective remedies in how the government administers the mandate for how biofuels are blended into the nation's fuel supply.
With Cruz up for reelection in November, he is not expected to let up on an issue that is important to Texas' powerful oil industry.
"I wouldn't expect Senator Cruz to back off any position he has on any subject," Grassley said.
Trump is expected to meet with ethanol producers at the White House later this week, Ernst said. Midwestern politicians are reluctant to make any change to the ethanol program, concerned it might reduce demand for a product on which corn farmers in their states have made a good living since the Renewable Fuel Standard was created more than a decade ago.
"Any action that seeks to weaken the RFS for the benefit of a handful of refiners will, by extension, be borne on the backs of our farmers," a coalition of farmers' groups said.
Some political momentum for a bipartisan solution appeared this week when Sen. Tom Carper, DDel., ranking member of the Senate Environment and Public Works Committee, told Politico he would support changes to the RIN blending credit market.
Such a move, he said, "would not do harm to the Renewable Fuel Standard" but would "frankly help a number of refineries that are paying an arm and a leg for RINs when they never expected to do that," according to Politico.