Border Updates

Could Corn End Illegal Immigration?

Last Thursday, May 30, 2019, President Trump, in hopes of curbing illegal immigration, announced his intentions to impose new tariffs on imports from Mexico.

The following day, the Trump Administration’s Environmental Protection Agency announced that they were suspending the annual June 1 – September 15 ban of “E-15” fuel, which contains 15 percent ethanol and 85 percent gasoline. 15% ethanol is currently the highest ethanol level available at most gas stations.

The two actions by the Trump Administration were both taken with the US corn industry very much in mind.  Consider the following.

  • Mexico is the US corn industry’s biggest international customer
  • Ethanol (as a gasoline additive in the US) is made from corn
  • US corn crop plantings are far behind schedule due to a long, wet winter
  • Iowa, the biggest corn producing state, also has earliest primary election (February 3, 2020)

Ethanol as Fuel Additive.  Ethanol is ethyl alcohol (aka ‘grain alcohol’), the same type of alcohol in alcoholic beverages.  It is made by fermenting sugar with yeast and in its pure form it is highly combustible.

After the advent of the automobile and the widespread use of gasoline in internal combustion engines, it was discovered that ethanol was an effective agent to increase the octane levels of gasoline.  Insufficient octane causes irregular combustion within the engine, leading to a formerly common phenomenon known as ‘knocking’ – the rapid thuds of misfiring pistons.

Lead compounds were originally used by the gasoline industry to improve octane levels.  As the public became more informed and demanding with respect to the environment, the toxicity of leaded gasoline became unacceptable.

In the US, ethanol was a particularly attractive substitute to lead compounds as a fuel additive because ethanol can be made from corn sugar and the US is the biggest corn producer in the world.  In addition, because the underlying corn sugar comes from a carbon dioxide producing plant, the product is relatively ‘green’ and renewable as compared to petrochemical alternatives.

Summertime Ban of E-15.  The summertime ban of E-15 fuel had only been in place since 2011. The logic of the ban is that, according to some authorities, higher ethanol exhaust levels during warm weather leads to higher smog levels.

The environmental efficacy of the ban is subject to debate.  According to the Renewable Fuels Association, E-15 fuel produces less smog than standard E-10 fuel.  And the summertime ban of E-15 fuel makes some gas stations unwilling to offer it because of the need to switch out the fuel sources and equipment.  Therefore, the summertime ban decreases the use of ethanol (and increases the use of straight gasoline) year-round, not just in the summertime.

Further, ethanol is cheaper to produce than gasoline and E-15 is generally 5 to 10 cents cheaper per gallon than E-10.  Over the course of a summer, these savings could be meaningful to many motorists.

Mexico.  As seen in the table below, Mexico is the largest export market for U.S. corn.

Imposing tariffs on imports from Mexico increases the probability that Mexico will impose tariffs on goods from the U.S., including corn, which would make these US products marginally less competitive in Mexico.

Lifting the summertime ban on E-15 was not ostensibly tied to the talk of tariffs on Mexico, but common sense indicates that the timing of the two announcements was not coincidental.

A Long, Wet Winter.  The major agricultural sectors of the US have endured one of the coldest, wettest and longest winters on record.  Historically U.S. agriculture has been remarkably adept at hitting the tightest planting windows that Mother Nature allows. This year, however, many U.S. growers have simply run out of time.  The end of May is a common deadline for planting with respect to crop insurance and ‘prevented planting’ acres will be near record highs for the corn market.

The talk of tariffs on Mexico last week provoked an immediate response in the corn futures market, with prices gapping higher.  While high prices are ordinarily a good thing, this price action was more driven by problems on the supply side than increased demand.  Higher probability of weaker demand from Mexico could result in some corn growers deciding to plant even less corn than weather conditions permit.  This would add another negative to an already discouraging outlook for the gross revenue of corn growers.

The politics of lifting the summertime ban on E-15 is much less complicated than the overall corn market.  Lifting the summertime ban on E-15 is likely to be looked on favorably in Iowa, America’s leading corn producer and the site of the first major presidential primary on February 3, 2020.

Border Updates
4 Comments on this post.
  • Ron
    6 June 2019 at 10:11 pm
    Leave a Reply

    No sugar coating. There are 25.8 million undocumented job stealers and wage killers criminal poor uneducated
    Spanish speaking lifetime welfare
    Recipients costing America billions. The fact that they drive without insurance and place financial harm to schools, hospitals, police, prisons, and sancuary cities love it.

  • fnfcst
    6 June 2019 at 11:00 pm
    Leave a Reply

    This may be great politically, but the whole ethanol boondoggle is another story. The big corn producers love it, but it ruins engines and lowers gas mileage. And, if you are concerned about CO2 emissions (which I am not), the production and use of ethanol does not reduce carbon dioxide emissions.

  • Michael
    3 August 2019 at 3:52 pm
    Leave a Reply

    In TX we are flooded with illegal aliens now. I think we have over 30,000 in detention centers in our state alone. More keep coming–it’s insane and a nightmare. Trump tried to stop it, but courts and lawyers keep blocking him from doing his duty.

  • Joseph Vincent
    15 October 2019 at 2:31 am
    Leave a Reply

    See what excuses can be made to raise gasoline prices. Its that time of the year. Always happens.

  • Leave a Reply

    • How the Media Made Covid-19 Worse February 24, 2021
      Even though millions of arms are getting injected with Covid-19 vaccines – and the numbers of new cases, hospitalizations and deaths are dropping – the media doctors are warning the public to continue to take all the protective measures of masking, distancing, hand washing and isolation.  This is no time to let up our guard, […]
    • Fallen Capitol Police Officer’s Mother Says Media Is Lying February 23, 2021
      The mother of Brian Sicknick, the Capitol Police who died in the January 6 Capitol riot, is speaking publicly about the media's false reports following her son's tragic death. In an interview with the Daily Mail, Gladys Sicknick, 74, said she believes her son suffered a stroke during the riot, despite media claims that he […]
    • Seattle Pays $10,000 to a Communist Activist February 23, 2021
      The city of Seattle agreed to pay $10,000 to settle a lawsuit last week. Brought to federal court by a woman named Ada Yaeger, the suit is in regards to the city's plan to remove her tent from Cal Anderson Park last December as part of clearing out a new 'autonomous zone.' Local news outlets […]
    • Biden Administration Cuts Power of ICE by 80% February 22, 2021
      According to a Washington Post report, President Joe Biden’s deputies have taken away the ability of ICE officers to safeguard 300 million Americans from illegal migrants. The report outlines a memo that imposes reduced enforcement priorities for the nation’s Immigration and Customs Enforcement (ICE) officers. The 90-day rules will block roughly 80 percent of deportations, […]
    • Iranian Terrorists Attack U.S. Forces, Biden Responds by Pursuing Iran Nuclear Deal February 19, 2021
      Former U.S. officials and national security experts are criticizing President Joe Biden after his administration announced they will re-enter talks with Iran to pursue a nuclear deal. Ned Price, State Department spokesman, said that the Biden administration would “accept an invitation from the European Union High Representative to attend a meeting of the P5+1 and […]
    • U.S. Officials Forced to Take Vaccines from Russia February 19, 2021
      U.S. officials serving abroad in nations with low-grade medical capabilities are being forced to get COVID-19 vaccines from foreign governments, including Russia, due to a lack of supply from the Biden administration. As the Washington Post reported, “At least 13 foreign governments offered to inoculate U.S. officials serving abroad with their own supplies of U.S.-made […]
    • Biden: “Everyone Knows I Love Kids Better Than People” February 19, 2021
      President Joe Biden is receiving backlash after saying "I love kids better than people," at CNN's town hall event. “Signing off with a final notable quote from Joe Biden during his town hall this evening: ‘Everyone knows I love kids better than people,'” wrote Kayleigh McEnany, former White House press secretary for President Donald Trump. […]
    • Los Angeles School District Cuts One Third of Police Officers February 18, 2021
      The school board of the Los Angeles Unified School District, California’s largest public school system, voted Tuesday to cut a third of police officer positions and decrease the powers of remaining officers. The district approved a plan to eliminate 133 police officer positions. The school board also banned police from using pepper spray on students […]
    • Is Dwayne ‘The Rock’ Johnson Running for President? February 17, 2021
      Wrestler and actor Dwayne "The Rock" Johnson is thinking about a potential run for the White House. In an interview with USA Today about his new sitcom “Young Rock,” The Rock talked about the comments he made in 2017 on The Ellen DeGeneres Show that he may run for President. “I would consider a presidential […]
    • The U.S. is Losing the Border under Biden’s New Rules February 16, 2021
      Former ICE Director Tom Homan told Fox News host Mike Emanuel that the Biden administration's strategy to open borders is resulting in a huge surge of border crossing. "And you know, so this isn't by accident," Homan said. "This is by design. This is an open border strategy. [Biden] has bowed to the left, we […]