Debate over Renewable Fuel Standard Could Hurt Farmers
When the oil industry and the farm lobby clash, who will win?
Next time you’re pumping gas for your car, take a look at the gas pump. Chances are that you’ll see a little label informing you that the gasoline you’re putting in your vehicle may contain up to 10 percent ethanol. That’s because of the Renewable Fuel Standard (RFS), a program that was instituted by the EPA in 2005 to reduce dependence on foreign oil imports—which, at the time, were 60 percent of total US oil consumption.
Twenty years later, the fracking boom has reversed the situation. Now, the US is a net exporter of oil, and the oil industry views ethanol as a competitor to their (now also domestically produced) product. Small refineries, in particular, claim that the RFS mandate is a hardship and have requested waivers for the biofuel blending requirements. In August, the EPA caught up on its backlog of waiver requests and granted full or partial waivers to 140 refineries.
The big question then became: Should larger refineries be required to make up the 1.1-billion-gallon shortfall of waived biofuel requirements, or not? Predictably, the farm industry has lobbied for complete reallocation of the biofuel requirements to keep demand for ethanol steady, while the oil industry would rather cut its total use of biofuels to save on costs.
The debate went all the way to the White House, and on September 16 the EPA opened a proposal for a 30-day public comment period on two options for reallocating biofuels production—at 50 and 100 percent. Anything less than a 100 percent reallocation could cause corn prices to drop—especially combined with retaliation to US tariffs and a predicted record high corn crop—causing financial hardship to farmers.
This isn’t at all what Charles Walters was thinking when he encouraged ethanol production back in the 1970s. He envisioned a world in which “the farmer ought to grow his own tractor gas”—use surplus grain to produce ethanol in an on-farm still, thus saving on fuel costs. This proved impractical for many reasons (it’s nearly impossible to make 200-proof ethanol in a home still, and the homemade brew corroded tractor fuel lines), and today’s industrial ethanol production benefits farmers only by providing a steady market for over 40 percent of the nation’s corn crop.
Farmers today have become so dependent on the artificially high corn market created by the RFS that, if the required amounts of ethanol suffer any significant cuts, corn prices will plummet. With all due respect to Charles Walters, the best option for today’s eco-ag farmers to weather those price fluctuations probably isn’t to invest in your own still. It’s to diversify production away from commodity crops. After all, it’s not like Big Oil is a competitor in the grassfed beef or organic broccoli markets.
