ted cruz, elections
Ted Cruz (Justin Miller)

In Battle Between Big Oil and Big Corn, Ted Cruz Finally Called Out Trump

Cruz has studiously avoided confronting Trump. But when it came to helping oil refiners get a bigger share of the EPA's deregulatory spoils, the senator was more than willing to play hostage politics.


A version of this story ran in the May / June 2019 issue.

Ted Cruz has finally found the courage to call out the Trump administration. He’s demanding that the president and his bureaucrats stop providing cover for the ethanol industry and stand up for fossil fuel rights.

Oil companies have long complained that the Renewable Fuel Standard (RFS), which requires refineries to blend ethanol into their gasoline, is killing their bottom line. Refiners that don’t have the capacity to blend ethanol are required to buy regulatory credits known as RINs from those that do. The industry wants the EPA to make it easier to wiggle out of compliance, which would save refiners hundreds of millions of dollars.

In February, Cruz and four other senators threatened in a letter to derail the confirmation of the EPA’s then-Acting Administrator Andrew Wheeler if he didn’t acquiesce to their demands. Cruz has studiously avoided confronting Trump. Yet there he was playing hostage politics with his friends in the White House, acting as a tool of Big Oil in a high-stakes battle with King Corn over how Trump’s EPA should divvy up the spoils.

Ted Cruz
Ted Cruz speaking at CPAC 2015 in Washington, DC.  Flickr/Gage Skidmore

Cruz’s commitment to the cause is so deep that he’s joined forces with some unlikely allies.

A year before he sent the Wheeler letter, Cruz stood in front of hundreds of union workers at the Philadelphia Energy Solutions refinery and promised to save their jobs. The independent refinery had just filed for bankruptcy, and its owners blamed the cost of compliance with the RFS. Cruz claimed that powerful Wall Street firms were getting rich by shorting the RIN market and forcing plants to shutter. “The ones that would be put out of business are the speculators, who can go and speculate on something else,” Cruz declared.

In reality, a private equity giant had swooped in a few years back, stripped the refinery’s assets and left it saddled with hundreds of millions of dollars in debt. No matter. The ethanol mandate was a convenient scapegoat, and Cruz had a prepackaged message to deploy.

pollution, smog, refineries, environment
The Valero refinery in Three Rivers.  Jen Reel

For years, Valero Energy, a mega-refiner and one of Cruz’s staunchest political supporters, has led an astroturf lobbying campaign that uses sympathetic figures — mom-and-pop gas station owners and union refinery workers — to build support for overhauling the ethanol mandate. The tactic has worked: Last March, the EPA bailed out the Philadelphia refinery by forgiving much of its RIN debt, saving 1,100 jobs (though the company is on the brink of failure once again).

Cruz’s office insists his cause is noble and motivated purely by “jobs and economic freedom.”

“He doesn’t believe the government should be creating winners and losers,” a spokesperson said.

But it’s giants such as Valero, which spent nearly $1 billion in 2017 to comply with the RFS, that stand to gain the most. Even though Wheeler was ultimately confirmed, Cruz’s pressure campaign has worked. Wheeler’s EPA is handing out refinery exemptions like candy, and every time Cruz or another senator makes a threat, RIN investors get spooked, the cost of regulatory credits plummets and refiners save on compliance costs. Valero reported earlier this year that it saved $400 million in 2018 from lower RIN costs, and revenue from its refinery operations jumped 25 percent to $5 billion. Apparently standing up to Trump does pay.