You never know when it will rain. You never know what prices will do. You never know when war, a drought, a flood, or a pandemic will disrupt demand or supply.
Almost the only predictable thing in agriculture is that when things are going poorly in the United States, the ethanol industry will come asking for a bailout.
So it is with the coronavirus crisis. The companies that turn grain into an inferior fuel are already subsidized up to their necks by state and federal governments, and they are already eligible for the coronavirus relief available to all businesses. Yet they want more — they want their own special coronavirus bailout.
Yes, the ethanol industry is now lobbying the Trump administration for a bailout, Reuters is reporting.
“The U.S. biofuel industry has asked the Trump administration for funds from the U.S. Department of Agriculture’s Commodity Credit Corporation to help it survive a demand slump triggered by the coronavirus outbreak, according to a letter seen by Reuters.”
People aren’t driving because they are staying home to avoid spreading the coronavirus — or because they have been laid off. This has caused demand for gasoline to crater. Ethanol is a plant-based alcohol that refiners are forced by law to blend into their gasoline, and so when gasoline demand drops, so does ethanol demand. That’s why things are bad right now for the ethanol industry.
But things are bad right now for every industry. That’s why Congress created many hundreds of billions of dollars in spending to rescue American businesses. Small employers (fewer than 501 employees) can get federal grants through the Paycheck Protection Program. Large employers can get federal loans.
The Agriculture Department, meanwhile, will continue handing out its regular farm subsidies. The Renewable Fuel Standard (that is, the ethanol mandate) will continue creating artificial demand for ethanol. States will continue subsidizing ethanol at every level.
But these everyday ethanol subsidies and universal business subsidies apparently aren’t enough for the industry.
This is what always happens.
High corn prices and low gasoline prices in 2009? There was a push for an ethanol bailout.
Financial crisis in 2008? Push for an ethanol bailout.
Oversupply in 2007? Lobby for an ethanol bailout.
Another glut in 2010? Lobby for an ethanol bailout.
These days, every industry needs help. But the ethanol industry has been getting it all along and doesn’t deserve special treatment now.
