Big Corn vs. Big Oil: The Battle Over Biofuel

The planning for a meeting between moguls in the oil and corn industries is in its preliminary stages, but President Donald Trump is not scheduled to attend the summit, which could define the future of the U.S. biofuels market.

Sources told Reuters that though the President will not be in attendance like he was in previous renditions of this meeting, representatives from agency leaders would convey the executive branch’s positions. Other executives from the corn and oil industries will also attend.

Trump will be travelling to California next week to oversee progress on his notorious border wall proposal that would ostensibly keep illegal immigrants from Mexico out of the U.S.

Big Corn and Big Oil have been dueling over the future of the Renewable Fuels Standard, which requires oil refiners to mix biofuels like corn-heavy ethanol into their fuel. The RFS program started under President George W. Bush to help create demand for corn and reduce U.S. fossil fuel imports. The Midwest farm belt benefits from the policy, but the oil refiners do not—they lose petroleum-based market share of fuels and meeting the blending requirements costs them hundreds of millions of dollars.

A total of 27 small-sized U.S. refiners—a higher number than usual—have sought waivers from the biofuels standard program from the U.S. Environmental Protection Agency (EPA), Reuters reported last month, citing sources familiar with the matter. Refiners have been emboldened by President Trump’s anti-regulatory policies and court rulings last year that extended the criteria for EPA to grant waivers, the sources noted.

While U.S. President Donald Trump is a vocal supporter of the U.S. oil industry, he also supports the RFS, especially corn-based ethanol, which protects farming jobs in the states with large Republican majorities in the Midwest.

Zainab Calcuttawala for OilPrice.com