Trump Cannot Rob From the Working Class to Enrich the Ethanol Lobby | Opinion

On June 11, President Donald Trump signed an executive order at an Iowa ethanol plant to allow the year-round sale of E15, an environmentally unfriendly gasoline blend that contains 15 percent ethanol.

Trump told the crowd, "As a candidate for president, I pledged to support our ethanol industry and to fight for the American farmer." That can be laudatory politically, but altering the energy marketplace to help corn states at the expense of everyone else, particularly the working class, can be politically counterproductive. That may not have been the intention of the administration; however, it will become the implication should it not marry the move with further reforms soon.

According to a survey conducted by the American Automobile Association, the largest motorist group in the United States, when E15 was given final approval in 2012, only 12 million of the 240 million cars, trucks and SUVs on the road were cleared by their manufacturers to use E15. Per the Environmental Protection Agency, the use of E15 is still unsafe for vehicles released before 2001—cars that are predominantly driven by the less well-off. It is even prohibited for Americans to fuel other engines—including those found in motorcycles, boats and lawnmowers—with E15 because of the significant harm it can cause. But without further action by the Trump administration, many will be left with no other choice.

One may think that this is a case of no harm, no foul, as these millions of Americans can opt not to use the gasoline blend that Trump has unleashed. However, it is not that simple. The fuel mixture will soon dominate gas pumps nationwide, representing a great deal for farmers and the ethanol industry at large but a raw one for everyone else.

Because the government has incentivized the use of ethanol in gasoline, ethanol-free gasoline has already nearly disappeared from the marketplace. With all the restraints now off E15, it is inevitable that this trend will continue and that the 15 percent blend will all but replace the lower-ethanol versions on the marketplace today. This will lead millions of Americans, blind to the effects, to fuel their vehicles with it—creating significant, unintended costs for them, including reducing their range and fuel economy, and, for small-engine vehicles, significant operational problems.

Winning caucus points in Iowa would be helpful for political purposes. But Trump needs to serve all Americans on this issue, as he has on all the others. He needs to keep to his "drain the swamp" mantra so he won't leave millions of Americans behind in his quest to secure a 2020 victory. That is why it is essential for him to introduce other reform proposals to mitigate the damage caused to the working class by the ethanol order. The administration needs to prove to Americans in the rest of the country that it has not forgotten about them to retain their trust.

The most sensible next step for the president would be to legalize competition in the fuel industry. With E15 on pace to saturate the market, those who cannot or should not use the high ethanol blend will need alternatives, whose use is currently not on the table. For example, although the government currently allows the use of propanol for marine engines, it has not formally approved it for motorcycles and other comparable small-engine vehicles. Substitutes like this will become more critical than ever in the months ahead.

Ultimately, Trump needs to consider requiring all service stations to continue to offer the workable E10 alternative as well.

Since E10 still includes ethanol, that should satisfy the ethanol lobby, and further solidify Trump's support among the Iowa farmers.

But even ensuring the accessibility of these alternatives to the marketplace will not prevent millions of Americans from inadvertently damaging their property. The primary issue that the new ethanol deal presents is one of inadvertent consequences, not just one of alternative supply. So, it is also critical for the Trump administration to impose added safeguards that educate the populace on the negative implications of using E15. Gas pumps need to make this issue clear to their customers, imposing protections to ensure that the American people do not make mistakes that can cost them thousands each year.

Moreover, the Trump administration should also continue granting hardship waivers, as all its predecessors have, to the small refineries that struggle to comply with the law's heavy ethanol blending requirements.

Although the ethanol lobby is imposing significant pressure on the White House to remove the waivers, for some refineries, complying with the ethanol blending mandate has become costly to the point of unsustainability, threatening to limit consumers' market options and hence the availability of alternative fuel blends across the country.

e15 trump epa ethanol
K.C. Macklin's 2002 Roadhawk is parked at a station in Lakewood, Colorado, in 2014 while he buys ethanol-free gas. On June 11, President Donald Trump lifted the summertime ban on selling E15, gasoline with 15 percent ethanol. Cyrus McCrimmon/Denver Post/Getty Images

From a policy standpoint, continuing to issue waivers to refineries in dire need is a no-brainer. A brief the EPA filed in the D.C. Circuit Court of Appeals in May 2018 showed that there is nothing unlawful about how the administration has issued them, while data from renowned agricultural economist Scott Irwin found that they have not meaningfully affected demand for ethanol, if at all.

Trump cannot solely serve the ethanol lobby on this issue. His administration needs to be the administration for everyone. Now, 17 months before the next presidential election, the White House needs to prove that more than ever. If he succeeds in demonstrating this, it will have profound results on his re-election prospects.

Here's hoping that the administration has not forgotten about the forgotten men and women it pledged to protect.

Peter Ferrara is an attorney and senior policy adviser to the National Tax Limitation Foundation, and teaches economics at King's College in New York. He served in the White House Office of Policy Development under President Ronald Reagan and as associate deputy U.S. attorney general under President George H.W. Bush.

The views expressed in this article are the writer's own.