Sen. Ted Cruz has emerged as Washington’s leading critic of the ethanol industry, holding up federal nominees over his opposition to the national biofuels mandate, lambasting the sector in fiery Senate floor speeches, and leading a coalition of oil-friendly lawmakers to the Oval Office in hopes of weakening the Renewable Fuel Standard.
Mr. Cruz has, for all intents and purposes, become public enemy No. 1 for an ethanol industry that has engaged the senator in a heated war of words over the future of the fuel. Bob Dinneen, president of the Renewable Fuels Association, the sector’s largest trade group, blasted Mr. Cruz in a 2018 op-ed in the San Antonio Express-News, taking the fight to the senator in the pages of a leading Texas newspaper.
“Cruz needs to stop scapegoating the RFS because a few refiners don’t like the program. Renewable fuels like ethanol are not the enemy. Indeed, renewable fuels hold the key to a more sustainable energy future that will provide consumers with both choice and savings at the pump,” wrote Mr. Dinneen.
At the heart of Mr. Cruz’s objections to the biofuels sector is the damaging effect he says it’s having on oil-and-gas refiners, some of which say they’re heading toward financial ruin because of the federal ethanol mandate, commonly known as the RFS.
Mr. Cruz cited the recent bankruptcy of a Philadelphia oil refinery as an example of the problems with the RFS, and suggested that refineries in his home state of Texas — the oil-and-gas capital of the country — could be next…
Iowa has benefited more than any other state from the RFS, which requires the blending of ethanol with gasoline. Iowa farmers grow much of the corn needed to help meet the program’s yearly targets, and Sen. Chuck Grassley, Iowa Republican, is one of the sector’s leading champions in Washington.
That’s put him in direct conflict with his fellow Republican, Mr. Cruz, and he strongly denies the allegations made by the Texas senator against the ethanol industry and the RFS specifically.
“There is a manufactured and baseless rumor that the RFS has caused an oil refinery in Pennsylvania to file for bankruptcy. This example has been cited repeatedly as a justification for forcing RFS supporters to agree to sudden and drastic changes in how the RFS was designed,” Mr. Grassley has said on the Senate floor.
The Philadelphia refinery says it went bankrupt because of the high cost of Renewable Identification Numbers, which are assigned to each gallon of gasoline that’s blended with ethanol. Smaller refineries that don’t have the capacity to blend the fuel themselves must buy RIN credits from larger facilities, and the price of those credits has skyrocketed over the past several years.
But ethanol leaders say the solution is to blend more ethanol, not less, thereby introducing more RINs into the market and driving down prices.
In Texas, ethanol backers say the senator is wrong to fight only for oil-and-gas interests when the state’s agriculture sector has benefited from the RFS.
“Sen. Cruz — we’ve worked with him since he’s been in the Senate,” said Wesley Spurlock, chairman of the National Corn Growers Association and director of the Texas Corn Producers Board. “We know the oil-and-gas industry is the No. 1 industry in Texas, but then agriculture, grains, livestock, is No. 2. It’s a massive industry in Texas. It’s too bad we’re pitting one industry against another with the RFS.”
For his part, the senator has said that there’s a potential win-win solution in reforming the RFS — a solution that could save oil refineries but also continue benefiting corn growers. His supporters say his desire for a compromise is because he understands not just the oil industry but also the needs of Midwestern states such as Iowa, largely due to his presence there during his failed 2016 presidential run.
“That’s led him to take the bull by the horns on this,” said Brendan Williams, vice president of government relations at PBF Energy Co., a New Jersey-based refining company.
Mr. Cruz won the GOP Iowa caucuses in 2016 despite being an outspoken critic of ethanol.