Ron Paul: Is Trump’s America First Energy Policy Being Hijacked?

The Associated Press
The Associated Press

Whatever differences they may have with him aside, libertarians and free-market conservatives should be pleased with President Donald J. Trump’s support for reforming or repealing federal dictates that help foreign businesses and harm US workers. An example of this is the Renewable Fuel Standard (RFS).

The RFS mandates that refineries create a set number of renewable fuel gallons each year. Although only the largest refineries are capable of blending ethanol into fuel themselves, all refiners are required to take part.

The government measures compliance through each refineries’ holding of a satisfactory number of Renewable Identification Number (RINs) credits, which Washington assigns to each gallon of approved biofuel. The only recourse for the large percentage of small refiners that are incapable of blending themselves is purchasing surplus RINs credits from those who mix more than necessary.

Unfortunately, speculators quickly buy surplus credits. This increases the credits’ price above what many small refiners can afford. As a result, refineries have had to look for other ways to meet the government’s ethanol mandate. For many, this has meant importing renewables from overseas.

Fortunately, last month President Trump announced intent to level the foreign and domestic playing field and remove Wall Street’s stranglehold by attaching RINs credits to exported renewable fuel.

While repeal of the entire ethanol mandate would have unquestionably been a better option, President Trump’s plan will still create a freer, more open marketplace. Not only will it generate over 1 billion more gallons of exported American fuel by removing red tape, but it will also prevent future refinery bankruptcies by increasing the supply – hence reducing the price – of RINs.

While one would think supporters of the RFS would welcome President Trump’s decision to help refineries without repealing the ethanol mandate, last week Sen. Chuck Grassley (R-IA) succeeded in getting the White House to delay implementation of this reform measure.

Sen. Grassley complains that “the Renewable Fuel Standard is to promote domestic production, not to subsidize exports of ethanol.” But President Trump’s proposal doesn’t subsidize anything. It simply ensures that federal mandates do not give other countries’ markets an unfair advantage over our own.

If Sen. Grassley is truly concerned about subsidies, he should advocate for a complete end to the RFS. After all, the real subsidy here is not U.S. exports, but ethanol itself. The RFS’s requirement that refiners mix a given percentage of ethanol into fuel each year creates unchecked demand for a product that is said to affect consumers by harming the environment and reducing fuel mileage in vehicles. Until that time though, the least the senator can do is back this proposal that alleviates some of the current domestic pain.

All hope has not been lost for President Trump’s proposal to tame the RFS. In fact, last week EPA Administrator Scott Pruitt told Sen. Ted Cruz (R-TX), an outspoken advocate of RINs reform, that the conversations are still ongoing. Interestingly, Senator Cruz’s outspoken advocacy of repealing the ethanol mandate did not stop him from winning the Iowa caucus in 2016, just as opposition to the mandate did not hurt my 2012 Presidential campaign.

If the White House is serious about its America First agenda, it will follow through by giving blue-collar refinery workers across the globe much-needed relief. As a resident, and former representative, of the Texas Gulf Coast, one of the most important refining areas in the country, I understand the wide-scale scope of this problem and hope that the administration is up to the task of reform.

Ron Paul, a former congressman for Texas, is host of the Ron Paul Liberty Report and Chairman of Campaign for Liberty.


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