Local refiners need relief from RFS constraints

This month, Sen. Pat Toomey, R-Pa., sent a letter to the Environmental Protection Agency (EPA) Administrator Andrew Wheeler asking him to visit a local oil refinery to better understand how critical refiners are to Pennsylvania’s economy. The oil industry has a long history of providing stable jobs for Pennsylvanians, but recent pushes by large specialinterest groups have threatened the stability of the industry, putting the economic health of the state and energy security of the country at risk.

About 13 years ago, Congress created the Renewable Fuel Standard (RFS) to limit the nation’s dependence on foreign oil. The RFS requires oil refiners to blend up to 10 percent of renewable fuel into transportation fuel. In the United States, most refineries use corn ethanol to meet their obligations under the RFS. To track refiners’ compliance with the program, the EPA issues Renewable Identification Numbers (RINs) as credits for blending ethanol into fuel.

When they drafted the program, Congress failed to consider that only the largest refiners have the equipment needed to blend ethanol with fuel. This left small and independent oil refiners, many of which call Pennsylvania home, on the hook to purchase RINs from large refiners and others who are capable of blending ethanol. As Toomey wrote, “The RFS picks winners and losers amongst sources of energy and has named merchant refiners, particularly those in the Philadelphia region, the losers.”

To make matters worse, Wall Street speculators meddled in the RINs marketplace by purchasing and then hoarding credits, creating a shortage and driving up the price of RINs to unprecedentedly high levels. The brunt of the pain landed squarely on small, independent oil refiners. Just a few months ago, one Pennsylvania refiner, employing more than a thousand people and supporting countless others in the process, filed for bankruptcy, citing the RINs burden as a driving force behind its financial failure.

As a part of the RFS, the EPA has the ability to grant waivers to refiners struggling to meet their blending obligations caused by Wall Street’s market manipulation. Earlier this year, when the EPA granted waivers to struggling refineries, the powerful ethanol lobby cried foul, claiming that the EPA was destroying demand for ethanol even as ethanol producers told shareholders there was no reason to change the outlook for 2018.

In their latest attempt to manipulate the RFS, the ethanol lobby is pushing EPA Administrator Wheeler to approve the year-round sale of E15, a blend of gasoline containing 15 percent renewable fuel. Most vehicles on the road are not designed to run on E15 and fuel blends with more than 10 percent ethanol would cause significant damage to gas station storage tanks not designed for a higher percentage of biofuel. To store this blend of biofuel, gas station owners would need to divert capital to retrofit gas stations to handle the E15 blend, a cost that would surely be passed to the consumer.

While parties on both sides of the issue can agree that RFS reform is necessary, Congress must find a solution that protects the energy security of the country and prevents economic destabilization due to lost jobs. Considering Pennsylvania’s energy-rich history, finding a common-sense solution to the RFS is critical to ensuring the long-term stability of the state and our communities.

Tim Brink is executive vice president of the Mechanical & Service Contractors Association of Eastern Pennsylvania.