Iowa Senators still cling to their unneeded biofuels boondoggle

Fuel Fix:

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 he 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.
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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.
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Some political momentum for a bipartisan solution appeared this week when Sen. Tom Carper, D-Del., ranking member of the Senate Environment and Public Works Committee, told Politico he would support changes to the RIN blending credit market.
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Why should the rest of country be forced to pay for increased fuel costs just to benefit Iowa farmers?  That makes no sense to anyone who is not an Iowa farmer.   If the RIN prices are being manipulated by speculators, the appropriate regulators should charge them with market manipulation.  But keeping the mandate hurt consumers and hurts US national security.

Consumers are forced to buy a crappy product that damages small engines and makes large engines less efficient.  The money being wasted on RINs could be better used to convert the refineries to the handling of the light crude being produced by shale drillers.  This would cut the need to import foreign oil to a much greater degree than any cuts as the results of ethanol.  In fact, the US could virtually eliminate the import of foreign oil if the conversion was made.

If the only rationale for keeping the mandates is the rent-seeking of a group of farmers, it has lost its reason for existence.  Consumers and taxpayers need to rebel against this waste.