Big Corn vs. Big Oil: Zero-Sum Game


On Tuesday, President Donald Trump held a rally in Council Bluffs, IA  supporting Iowa Republican candidates and promote his administration policies supporting ethanol production. Iowa, being central to what we often refer to as the “Big Corn” industry was pleased to hear what he had to announce. “We’re heading to Iowa where we have a big statement to make on ethanol for our farmers,” Trump said. “We want to get more fuel into the system…a promise I made during my campaign, and you know I keep my promises.”

Two major bullet points came from  the announcement: Trump will direct the EPA to allow year-round use of gasoline blended with 15% ethanol, or E15 as well as directing them to pursue changes as a way to end manipulation and bolster transparency in the Renewable Identification Number (RIN) market.

The announcement comes after roughly 18 months of relatively damaging policies to the agricultural industry. These include the increased amount of waivers granted to oil refiners, reducing their obligations to buy and blend corn into their fuel mixes; reducing demand and plunging the RINs market to a 5-year low, down from over $1.00 last year to only $0.12 today. The industry also felt a hit from the recent “trade wars” as China retaliated with tariffs on American soy, corn, wheat, cotton, rice, beef, pork, poultry, fish and dairy products. Soybean prices have declined more than 20% and corn prices are down 10% this year.

The combination of the two policy announcements on Tuesday is the attempt to appease both “Big Corn” and “Big Oil” in a battle that is often viewed as a zero-sum game and a difficult balancing act at best. This delivers on his campaign promise to support ethanol while also addressing some independent refiners concerns about the high cost of fulfilling the U.S. Mandates compelling them to use corn-based fuel additive.

The announcement was unsurprisingly, well received in the Farm Belt area, but oil refiners are not happy and have already promised to challenge it in court. The battle between corn and oil clearly is not over.

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As Director of Marketing for Guttman Holdings, I lead our advertising, digital marketing, branding, and public relations strategies, and share my expertise to communicate key messaging to all our stakeholders. With my diversified leadership background, I also drive innovation and cutting-edge business practice and results, to generate interest in Guttman Energy, Guttman Renewables, and Source One service offerings.

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