Government Shored Up Oil With Purchases, Now Senators Say It Needs To Help Ethanol

May 19, 2020

With people driving less because of COVID-19 stay-at-home orders, demand for ethanol has plummeted and dozens of plants across the country are sitting idle. 

Now Congress is at work on another pandemic relief package. The House last week passed the $3 trillion HEROES Act, which includes payments to ethanol producers. They didn’t get any funds from the CARES Act, which was approved in March.

The oil industry didn’t, either, but then the federal government bought a million barrels of oil for the strategic reserve. 

Sen. Chuck Grassley (R-Iowa) had introduced an amendment to the CARES Act that would have granted relief for the ethanol industry if the oil companies got help. Now Grassley is introducing the amendment as a standalone bill because, he says, it’s a fairness issue. 

“I’m not sure the oil companies, or oil-interest senators, see the same equity connection I do,” he says, “But that doesn’t keep us from moving ahead.”

Sen. Amy Klobuchar (D-Minn.) is co-sponsoring the bill. Grassley says the bipartisan effort comes naturally to the senators from neighboring states.

“Whether it’s on agriculture, health legislation, maybe a few other things, Sen. Klobuchar’s kind of a natural partner for us to work together,” Grassley says. “We do that on a lot of different pieces of legislation.”

Ethanol production hit record lows in April, though small gains have been made in May. Grants from $100 million previously promised for the expansion of sales of E15, a higher blend of ethanol than currently found in most gasoline, are now available, too. 

Grassley said the goal of the bill is to “lay down a marker that if we’re doing something for oil we ought to do something for ethanol.”