The ethanol lobby is talking tough and issuing ultimatums to the Trump White House. Its message, in brief, is “Don’t mess with our federal mandate.”
If the White House wants credibility in its free-enterprise talk and promises to drain the swamp, it should tell the ethanol lobby to get lost.
The fight began because refiners are finding it increasingly unaffordable to comply with the federal ethanol mandate, and if it continues it might kill independent oil companies. The office of Sen. Chuck Grassley, R-Iowa, came to the White House on Wednesday and sought to dictate terms, telling the executive it could provide whatever relief it chose to those independent refiners, but it mustn't touch the mandate, officially called the Renewable Fuel Standard.
The ethanol lobby is formidable and used to getting its way. Grassley is one of the most seasoned lawmakers and a tough negotiator. His Iowa colleague Sen. Joni Ernst is fighting for the mandate too.
It's sometimes hard to tell where these Iowa senators' offices end and the ethanol lobby begins. Washington Examiner commentary writer Philip Wegmann reported last week on two Republican staffers, one from Grassley’s office and one from Ernst’s, cashing out to become the top lobbyists at the National Biodiesel Board and Green Plains ethanol company, respectively. That was just last week.
This network of lobbyists, combined with Iowa’s king-making position as the first state to pick presidential nominees, are the only reasons the ethanol mandate exists. It is economically, environmentally, and morally indefensible. But it's a political slugger.
Driving ethanol production artificially high raises costs for ranchers, strains water supplies, exacerbated a tortilla crisis in Mexico, ruins motorcycle engines, shortens the lifespan of lawn mowers, creates headaches for boat owners, increases smog, and distorts markets. What's not to love?
Absent the mandate, ethanol would enjoy some demand and be economically viable in a limited market. The mandate is a typical Washington overreach removing consumer choice and rewarding special interests. It's unconservative and unconscionable.
It's lobbyists' proposal to relieve independent refiners is more of the same. Some suggest a special accommodation for small refiners. Or maybe, the ethanol lobby proposes, Congress or the Environmental Protection Agency should create a special carveout from pollution standards just for ethanol — the industry already enjoys special benefits in fuel economy standards — that would boost ethanol production and thus lower the cost to refiners. The audacity of subsidy sucklers is a thing to behold.
Creating more carveouts and subsidies to pay off the victims of a heavy-handed federal boondoggle doesn’t count as draining the swamp. Rather than subsidize ethanol and small oil companies, or require ethanol and give it special exemptions, we propose the simpler fix of killing the Renewable Fuel Standard.
Many businesses have invested in the RFS and they shouldn’t have the rug pulled out from under them, so we propose that the RFS be phased out over five years, as proposed by Sen. Ted Cruz, R-Texas, in 2015. Reduce the mandated level by 20 percent each year until it hits zero. The original legislation didn’t prescribe any level of renewable fuel past 2022 anyway, so there was no reasonable expectation of government support in the long run.
President Trump’s best message when he was a candidate on the campaign trail was that Washington was bought and paid for by special interests. He can live up to his promises by telling one of the most formidable special interests to make it on their own without taxpayer largesse.