Can a Leopard Change Its Spots?

A tall, lanky, soft-spoken, Washington-based lawyer with an ivy league education is not the kind of person you would imagine as being a major force in raising the price of corn, yet Adam Gustafson is on the front lines of battle for ethanol. A regulatory attorney with Boyden Gray and Associates, Gustafson is breaking the hold the oil industry has had over the EPA for the past 8 years. If successful, his efforts will lead to a significant increase in the use of ethanol here at home and around the world.

During a presentation to the Indiana Ethanol Forum last week, Gustafson documented how the oil industry has controlled ethanol policy at the EPA for the past 8 years.  This control included controlling the scientific research the agency used to test and evaluate renewable fuels.  Not only was this data skewed against ethanol, it was in direct contradiction to the evidence being observed in the real world. If there was ever a proof that the Obama EPA had an anti-ethanol agenda, this is it.  However, Gustafson, and others, believe that all this is changing.

When Scott Pruett was picked by President Trump to head the EPA, there was a good deal of concern his big oil connections would have turn him against ethanol. Yet, that is not the case, maintains Gustafson.  He said Pruett has pledged to base EPA regulations on science, and science is on the side of ethanol.  Gustafson also maintains Pruett has been open and receptive to new ideas and data, a 180 degree change from the EPA of the past. An estimated 20% reduction in the EPA staff, mandated by big budget cuts, means a lot of heads will roll which may include some fossil fuel fanatics.

Gustafson is optimistic that the agency will soon take action to eliminate regulations that prevent E-15 from being sold in many locations during the summer. This will be a major step toward getting E-15 into the market. Gustafson also believes, in the coming years, higher blends of ethanol fuel like E-30 will be allowed for use in non-flex-fuel vehicles.  Evidence indicates that E-30 can be used in most cars with no problems. This will be vital in increasing ethanol demand. Only about 10% of cars today are flex-fuel, and only about 1% of those drivers actually fill up on E-85.

Domestic use is not the only bright spot for ethanol. Exports represent a significant growth market. Currently, there are 10 countries that buy ethanol from the U.S.  Sales have been on the rise and are expected to continue. Canada, Brazil, and China represent our top 3 customers; all are economies with growth potential.  It will, however, take support from the Trump White House to keep this market growing.

With over 2 billion bushels of U.S. corn currently sitting around looking for a home, increasing demand is the key to moving the price of corn above the cost of production.  It was the rise of the corn-based, ethanol industry a decade ago that lifted U.S. farmers back to profitability after 2 decades of minimal growth. Sustained demand is the key to a profitable future for agriculture.  This will occur if the changes we currently see in Washington continue.  Real regulatory reform and sustained support will be needed to make this happen.

  By Gary Truitt