National Farmers Union

America’s Battle with Big Oil

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Courtesy of Courtesy of National Farmers Union

America’s farmers and biofuels supporters are in a battle with Big Oil over the Renewable Fuel Standard (RFS), our nation’s principle biofuels policy. The oil industry, arguably America’s most powerful lobbying force, recently convinced the Environmental Protection Agency (EPA) to lower total biofuel requirements for 2014. The RFS calls for increasing amounts of biofuels to be produced each year. This is the first time since the RFS went into effect that the EPA has lowered the requirement, reducing the total target by an astounding 16 percent. The specific corn ethanol and total advanced biofuels requirements were slashed to levels below current production. The industry accomplished this through a PR and lobbying campaign based on misinformation. The lower biofuel requirement will hurt rural America, decrease current and future investments, and kill jobs. The misinformation needs to stop now.

Among the myths propagated by Big Oil is the so-called “blend wall.” This is the oil industry’s term for the limit at which they can blend ethanol into our nation’s fuel supply. Renewable fuels currently constitute roughly 10 percent of all gasoline sold in the United States, and the oil industry maintains that it cannot increase that percentage. However, the RFS was not intended to be convenient for the oil industry. It is intended to provide consumers a choice at the pump and to increase our nation’s energy security. As the most profitable and powerful industry in the world, the oil industry’s claim that it can’t blend an increased amount of ethanol is fallacious. The truth is that Big Oil is simply attacking the renewable fuels industry because it threatens oil’s market share. So, they have decided to refuse to let ethanol into the market.

The EPA’s proposal to lower the 2014 RFS targets would have a devastating effect on the biofuels industry, corn prices, and the farm economy. Investors in advanced biofuels, an industry that is just getting off the ground, are spooked and may well take their investments elsewhere if the EPA does not raise the targets. Billions of dollars in investment have already been lost due to the proposed targets.

If the EPA does not raise the targets, the United States will lose ground in the global race to dominate the advanced biofuels market.

Corn farmers and rural economies will also suffer. At $4.17, the corn price is already below the break-even point for many farmers. By reducing the corn ethanol target, corn prices will fall even more due to decreased demand. At a time that the U.S. Department of Agriculture is expecting a record corn crop, the lower targets are a kick in the gut for corn farmers and rural economies. In addition, there is a lot of corn out in the countryside that has yet to be sold, so any further decreases in price will continue to hurt farmers’ bottom lines. Farmers and ranchers are the bedrock of rural economies. It is vital that the Obama administration reverse course and go back to supporting farmers, ranchers, and a biofuels industry that employs 400,000 Americans nationwide.

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