The Ethanol Industry Is Starting to Hedge Its Political Bets

Most people, and most corporations, usually have a pretty good sense as to on which side their toast is buttered. That's inevitable, to some extent, of course. The ethanol industry is no exception, and it operates in an economy where the mandated addition of ethanol to gasoline may increase the cost at the pump by as much as 40 cents per gallon. And it may come as little surprise that the political donations of political action committees (PACs) of the ethanol industry, which traditionally have heavily favored Republicans, are now starting to lean toward more Democratic candidates. At present, 2023-2024 donations still heavily favor Republicans, to the tune of 60.5 percent to Republican candidates and a hair under 40 percent to Democrats.

But in this cycle, those PACs are now into donating to Democrats to the tune of $256,000. Employees of those companies have donated almost $180,000 to Democrats in that time frame, while trade associations are nearing parity in donations between Democrats and Republicans. The practical aspect of the ethanol mandate is one thing, but this support change may have political consequences in a critical midterm election. That could complicate things for ag-state Republicans this fall.

Push to Erase EPA Biofuel Mandates Now Gaining Steam in House

This is a big, big business. In the United States, revenues from the ethanol industry are right around $34 billion a year. Understandably, the people involved want to keep that cash flowing, and a large part of that revenue is due to the Renewable Fuel Standard Mandate from the Energy Independence and Security Act of 2007. What's more, the Section 45Z Clean Fuel Production Credit gives these companies a production tax credit ranging from $.20 to $1.00 per gallon.

And Democrats, remember, are the primary proponents of any kind of subsidy or tax credit, especially if it involves "renewable" energy sources.

Here's the thing: This year's midterm elections are perhaps the most critical elections since at least the Great Depression, possibly since 1860. The agricultural states, which have, in recent elections, tipped towards Republicans, are also the states with a large number of people and businesses interested in keeping these tax credits and subsidies in place. They don't want the ethanol gravy train to stop running, even if it does cost American consumers at the pump.

Here's another thing: The Trump administration and Congressional Republicans haven't shown much indication of reducing these credits and subsidies. In fact, when the opening rounds of the war with Iran drove up oil prices with a corresponding rise of price at the pump, the Trump administration doubled down on ethanol, allowing the percentage in motor fuels to increase to 15 percent:

The U.S. Environmental Protection Agency said in a statement released on Wednesday, March 25 that it has "issued a temporary emergency fuel waiver to allow nationwide sales of E15, gasoline blended with 15% ethanol, and to remove all federal impediments to selling E10, gasoline blended with 10% ethanol, across the country."
The agency said the waiver would start on May 1, 2026, and it will last until May 20, 2026. The EPA noted 20 days is the maximum window they could authorize more use of ethanol gas under the Clean Air Act.

In the 2026 elections, keeping the agricultural states in the Republican column will be critical to the GOP's retention of control of the House and Senate. If the perceived interests of a major ag-industry bloc are starting to swing to the left, that's something that GOP candidates need to be aware of, and now.

Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.

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