Big Oil Woos Big Corn To Fight Off Biden EV Push

Source: By Steve Hanley, CleanTechnica • Posted: Sunday, January 31, 2021

Big Oil is desperate. First President Joe Biden signs an executive order mandating the US government buy only electric vehicles manufactured in America for its 650,000+ transportation fleet, then S&P sends the world’s largest oil and gas companies a note telling them it will be downgrading their credit ratings in a few weeks. It wasn’t all that long ago that no one could imagine a world that doesn’t run on fossil fuels. But suddenly — like an avalanche that sweeps away everything in its path — the world changes and what was once unthinkable becomes the new norm.

No one at Kodak ever thought digital chips would replace film. No one at Xerox ever anticipated the fax machine. And no one at Nokia ever saw the iPhone coming. Like a deer in the headlights, Big Oil is watching the fast moving train wreck headed its way and trying everything it can think of to avoid the carnage a major market disruption will bring, even it it means cozying up to its long time rival, the ethanol industry.

Rival may not be quite the right word. Bitter enemy may better describe the relationship between the oil companies and the ethanol industry ever since Congress mandated adding ethanol to gasoline in 1988. Its use as a motor fuel exploded in the 1970s after the OPEC oil embargoes disrupted the supply of gasoline. When things got back to normal, the corn lobby prevailed on Congress (by doling out generous campaign contribution) to require all gasoline sold at gas stations contain at least 10% ethanol.

Oil companies don’t make ethanol, so that mandate automatically reduces the amount of gasoline sold each year by 10%. No wonder Big Oil and Big Corn have a tempestuous relationship. But now, the oil companies want to crawl into bed with ethanol suppliers to put a crimp in Biden’s EV plans. Their common goal is to prolong the life of the internal combustion engine era.

According to Reuters, American Fuel and Petrochemical Manufacturers, an oil refining trade group, acknowledges it has been in touch with representatives of the corn and biofuel industries at the state and federal level recently to seek support for policies that will reduce the carbon intensity of transport fuels and block efforts to provide federal subsidies for electric vehicles. The goal is to offer an alternative to Biden’s EV initiative and make sure there continues to be  a market for liquid fuels like gasoline and ethanol.

AFPM says it met earlier this month with some corn and biofuel industry lobbyists and that a few of its members are hoping to host another meeting in February to delve deeper into the future of liquid fuels. “This whole idea was going to have to take a whole lot of time to gel, but we have made some progress,” Derrick Morgan, senior vice president at AFPM tells Reuters.

It’s not going to be all smooth sailing, however, for the petrofuel crowd. Geoff Cooper, head of the Renewable Fuels Association, a leading biofuel industry trade group, confirmed RFA representatives were invited to participate in the February meeting, but said his organization had not yet decided whether to attend. “We weren’t born yesterday and we’re not going to let the oil industry play us like a fiddle,” he tells Reuters. “They have a long history of pushing surrogates and proxies to the microphone to do their dirty work and we’re not interested in that.”

Jon Doggett, head of he National Corn Growers Association, tells Reuters no February meeting had been scheduled, and distanced his group from the idea of an oil-corn alliance. “I have nothing to do with any refining groups. We haven’t talked,” he says. Big Corn also wants to make sure it doesn’t put itself in direct opposition to the new administration’s plans. It wants to see the current mandate for adding 10% ethanol to gasoline remain in force. Pushing back too hard against Biden’s EV policies could jeopardize that.

The crux of the matters is the oil industry believes carbon emissions from fuel can be reduced by requiring increased octane content, thus making gasoline burn cleaner. It just so happens that ethanol is an effective octane booster. Emily Skor, head of the biofuel group Growth Energy, tells Reuters her group has no plans to collaborate with the oil industry. “It’s no surprise the oil industry all of a sudden wants to give us a bear hug. We produce lower carbon fuels. They don’t.”

Big Oil is running scared thanks to Biden’s executive order mandating an end to federal subsidies  and that’s a good thing. Just don’t expect Big Corn to bail them out of their current predicament!