It’s the oddest of odd couples, yet understandable. According to a Reuters exclusive, the U.S. oil industry is teaming up with the U.S. corn industry to defeat a common foe: newly inaugurated President Joe Biden.
President Joe Biden has made his intentions on electric vehicles clear: hi team with march on towards electric veichles, transitioning the entire federal fleet of ICE vehicles to U.S.-made EVs in a process that will surely take years.
But the oil industry isn’t eager to go quietly into that dark night, and is hoping U.S. corn growers—who have fought valiantly on the opposite side of the oil industry for tougher biofuel standards—are equally as reluctant to sit back and watch the shift to Evs happen, at their expense.
The oil industry, according to Reuters, is meeting “a cool reception”.
The U.S. oil industry and the corn industry have always found themselves on opposite sides of the biofuel argument. The oil industry has clamored for a smaller biofuel mandate while the corn lobby has fought hard to maximize the amount of biofuel that oil refiners must blend with traditional gasoline.
So much so have they found themselves at opposite ends of the spectrum—and so large the lobbies—that biofuel waivers and biofuel mandates have made their mark on nearly every presidential election.
According to Reuters, The American Fuel and Petrochemical Manufacturers oil refining trade group confirmed that it has indeed recently reached out to national representatives of the corn and biofuel industries.
The oil industry is hoping to have the corn growers support for some policy that would both reduce carbon emissions from transportation fuels and block any attempt by the federal government to subsidize EVs.
Those EV subsidies are a threat to gasoline demand, as well as to ethanol demand.
The corn and oil industry lobby, forces combined, could be a force to be reckoned with.
By Julianne Geiger for Oilprice.com
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In 2018 total registered cars of all types on the roads in the United States amounted to 273.6 million while EVs amounted to 543,610 or a miniscule 0.2% and this with heavy government subsidies.
Replacing the entire federal fleet of ICE vehicles estimated at 690,000 vehicles with EVs will raise the total number of EVs in the United States to 1,233,610 or another miniscule 0.45%.
Still, three major hurdles will continue the limit the take-off of EVs well into the future. The first is the need for trillions of dollars of investment to expand global electricity generation capacity in order to accommodate the extra electricity needed to recharge the millions of EVs that are supposed to be on the roads by 2040. How could such expansion be sourced: nuclear, hydrocarbons or solar?
The second hurdle is the hundreds of billions of dollars of investments needed to build a global network of charging points.
A third is the realization that oil is irreplaceable now or ever. And whilst EVs are benefiting from evolving technologies, ICEs are equally benefiting from the evolving motor technology. As a result, ICEs are not only getting more environmentally-friendly but they are also able to outperform EVs in range, price, reliability and efficiency.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London