New York/Washington | Reuters — President Donald Trump’s administration has been scrambling to stem the tide of rising anger in Farm Belt states after its decision this month to allow numerous oil refiners to mix less ethanol into their gasoline, sources told Reuters on Tuesday.
Trump held a two-hour meeting on Monday with members of his cabinet after hearing blowback from farmers after the decision to grant exemptions from the nation’s biofuel laws to 31 refineries, two sources familiar with the discussions said.
It was unclear what actions Trump would be able to take to appease angry farmers. Reversing the waivers is not an option, the sources said, but the administration is trying to find other ways to boost ethanol demand.
Refiners are required to blend biofuels into the nation’s gasoline pool or buy credits to fund those who can. Corn farmers and ethanol producers lobbied to cut dramatically the number of exemptions from these rules, which have hit a record under the Trump administration.
Farmers bearing the brunt of Trump’s trade with China say his support of the hardship waivers has destroyed ethanol demand.
Refiners, especially smaller companies, have argued the biofuel laws are costly and overly burdensome. Trump’s expansion of the waiver program has saved the oil industry billions of dollars in compliance costs. On Tuesday, the EPA said in a statement that there was “zero evidence” that the refinery waivers have hurt demand for ethanol, which biofuels producers dispute.
The nation’s largest ethanol producer, POET, announced on Tuesday that it was cutting production at its plants and blamed the hardship waivers for the move.
“POET made strategic decisions to support President Trump’s goal of boosting the farm economy. However, these goals are contradicted by bailouts to oil companies. The result is pain for Midwest farmers and the reduction of hundreds of jobs and hundreds of millions of dollars of economic activity across Indiana,” said POET president Jeff Lautt.
Monday’s meeting included representatives from the U.S. Departments of Energy and Agriculture, as well as the U.S. Environmental Protection Agency, the sources said. The White House declined to comment.
Prior to Trump’s term, just a few smaller refineries were granted relief from this requirement. Trump’s administration has vastly expanded those waivers, including granting relief to facilities run by oil giants Exxon Mobil and Chevron. Trump personally directed the EPA to grant the most recent waivers, sources told Reuters.
“Not only is the government not keeping its word, but it’s also screwing the farmer when we have low prices for (corn),” said Iowa Senator Chuck Grassley, a Republican, on a weekly call he holds to discuss agricultural issues.
The EPA granted the exemptions just as Democratic candidates hoping to challenge Trump in 2020 visited the Iowa State Fair, where they sought to position themselves as fighters for ethanol.
Iowa is the nation’s largest producer of corn and ethanol; President Barack Obama won the state handily twice before it swung heavily to Trump in 2016.
Kelly Nieuwenhuis, a third-generation corn and soybean farmer from O’Brien County in Iowa, a deeply Republican part of the state, said he voted for Trump in 2016 but his support for the president is waning.
“I have talked to a bunch of farmers in the past few days, and they are fed up. They are not going to vote for Elizabeth Warren, but they said they are not going to vote for Trump, so they will sit this out,” Nieuwenhuis said.
Trump delivered on a long-sought change lifting a summer ban on higher-ethanol blends of gasoline, but farmers and ethanol producers say the refining exemptions have negated any benefits from that move.
— Reporting for Reuters by Jarrett Renshaw and Humeyra Pamuk; additional reporting by Stephanie Kelly and Chris Prentice.