U.S. oil industry seeks unusual alliance with Farm Belt against electric vehicle agenda

'We weren't born yesterday'

New York | Reuters — The U.S. oil industry is seeking to forge an alliance with the nation’s corn growers and biofuel producers to lobby against the Biden administration’s push for electric vehicles, but is so far meeting a cool reception, according to multiple sources familiar with the discussions.

The effort marks an unusual attempt by the petroleum industry to cozy up to its longtime rivals, reflecting the scale of its concern over President Joe Biden’s sweeping measures to combat climate change and tamp down fossil fuels.

While the oil industry and biofuels producers are natural competitors for space in America’s gas tanks, they share a desire to ensure a future for internal combustion engines.

The effort also reflects the rapidly shifting political landscape in Washington: the oil industry’s once-mighty influence has waned since Biden replaced Donald Trump as president, but the farm belt remains a vital and powerful political constituency.

The American Fuel and Petrochemical Manufacturers oil refining trade group confirmed it has been contacting state and national representatives of the corn and biofuel industries in recent weeks to seek support for a policy that would reduce the carbon-intensity of transport fuels and block efforts to provide federal subsidies for electric vehicles.

That proposal would be an alternative to Biden’s stated goal of electrifying the nation’s vehicle fleet and would ensure a continuing market for liquid fuels like gasoline and corn-based ethanol.

AFPM met in mid-January with some corn and biofuel industry lobbyists and some member refiners are hoping to host another meeting in February to discuss 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,” said Derrick Morgan, senior vice-president at AFPM.

The industry’s push to change the course of electric vehicle policy faces big headwinds: California has announced a ban on internal combustion engines by 2035, other states are considering similar measures, and automaker General Motors on Thursday announced it will produce only electric vehicles by then.

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 said. “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.”

The National Corn Growers Association is also considering whether to send staff the February discussion, according to two sources familiar with the matter.

NCGA CEO Jon Doggett told Reuters no such 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 said.

Asked if any of its state-level member organizations were considering attending, Doggett replied, “We have dozens of groups. I can’t know what all of them are planning.”

Sources said the biofuel and corn industry is reluctant to join with the oil industry on this issue not just because of its longstanding rivalry with refiners, but also because it does not want to publicly oppose the energy policies of the new president.

Whiplash in Washington

The refining sector enjoyed a seat at the table under former President Donald Trump, who was keen to bolster the oil and gas industry.

Biden marks a complete reversal. He entered the White House promising measures to restrain the oil industry, from pausing new drilling leases on public lands to contemplating tougher limits on emissions.

Biden this week pledged to buy 645,000 electric cars for the government vehicle fleet as part of a broader plan to advance EVs through vehicle procurement, infrastructure development and subsidies, threatening the multi-billion dollar gasoline market.

AFPM’s Morgan said refiners are not scared of electric vehicles but dislike rigid government mandates. “What we have a problem with are heavy-handed mandates that take away consumer choice, either altogether or in large part. We don’t think that’s the right way forward,” Morgan said.

The oil industry believes carbon emissions from fuel can be reduced by requiring increased octane content, which makes gasoline burn cleaner. Ethanol is a popular octane booster.

The U.S. Renewable Fuel Standard currently requires refiners to blend biofuels like ethanol into fuels. As a result, most gasoline sold in the U.S. has about 10 per cent ethanol in it. The biofuel industry has been pushing hard to ensure those mandates continue.

“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,” said Emily Skor, head of the biofuel group Growth Energy.

— Reporting for Reuters by Jarrett Renshaw and Stephanie Kelly.

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