Swordsmyth
09-26-2019, 05:26 PM
The CEO of W2 Fuel, a biofuel company, announced that he is closing his plant in Crawfordsville (https://www.desmoinesregister.com/story/money/agriculture/2019/09/24/another-renewable-fuel-plant-closes-iowa-leaders-wait-biofuels-fix/2433255001/) and laying off the fifty employees who work there. The reason he is giving for the closure is that the Renewable Fuel Standard waivers given to more than thirty small refineries by Trump’s EPA this year (85 total since taking office) have reduced demand for ethanol and the market won’t sustain his operations.
He’s blaming the EPA (and President Trump’s policies) for the closure of his plant. And in at least one regard, he has a valid complaint, but he’s looking at the wrong president. If Strom wants to blame someone, he should take it up with George W. Bush, because that’s the guy who put the RFS into place originally and created this situation.
Strom is angry about the reduction in market demand for his ethanol. But what he’s failing to admit is that there was never a real demand for the amount of ethanol that’s being produced in the midwest to begin with. There’s certainly a market for some ethanol, but nowhere near the amounts that are currently being pumped out. W2 Fuel and its competitors have been growing wealthy by selling a product to oil refineries that they neither want nor need.
The RFS created an artificial market demand for ethanol that wouldn’t exist without the government holding a gun to the heads of the refineries and forcing them to blend this poor quality fuel into the nation’s gasoline supply. Failing to do that means they either have to buy ruinously expensive Renewable Identification Number (RIN) credits or face massive government fines.
The government offering waivers to older, smaller refineries that aren’t set up to blend ethanol in the mandated quantities was a charitable act intended to save them from bankruptcy. But that same benefit should be offered to all refineries by doing away with the RFS entirely. Will that hurt the ethanol plants like Mr. Stroms? Yes, it will. But they were never operating on a fair playing field to begin with. The RFS distorted the free market in obscene ways, and now that meddling is coming back to haunt any number of people.
More at: https://hotair.com/archives/jazz-shaw/2019/09/26/iowa-renewable-fuel-plant-closes-without-government-mandated-market/
He’s blaming the EPA (and President Trump’s policies) for the closure of his plant. And in at least one regard, he has a valid complaint, but he’s looking at the wrong president. If Strom wants to blame someone, he should take it up with George W. Bush, because that’s the guy who put the RFS into place originally and created this situation.
Strom is angry about the reduction in market demand for his ethanol. But what he’s failing to admit is that there was never a real demand for the amount of ethanol that’s being produced in the midwest to begin with. There’s certainly a market for some ethanol, but nowhere near the amounts that are currently being pumped out. W2 Fuel and its competitors have been growing wealthy by selling a product to oil refineries that they neither want nor need.
The RFS created an artificial market demand for ethanol that wouldn’t exist without the government holding a gun to the heads of the refineries and forcing them to blend this poor quality fuel into the nation’s gasoline supply. Failing to do that means they either have to buy ruinously expensive Renewable Identification Number (RIN) credits or face massive government fines.
The government offering waivers to older, smaller refineries that aren’t set up to blend ethanol in the mandated quantities was a charitable act intended to save them from bankruptcy. But that same benefit should be offered to all refineries by doing away with the RFS entirely. Will that hurt the ethanol plants like Mr. Stroms? Yes, it will. But they were never operating on a fair playing field to begin with. The RFS distorted the free market in obscene ways, and now that meddling is coming back to haunt any number of people.
More at: https://hotair.com/archives/jazz-shaw/2019/09/26/iowa-renewable-fuel-plant-closes-without-government-mandated-market/