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Refinery Workers Press Lawmakers to Ease Biofuel Quota Costs


March 7, 2017, by Jennifer A. Dluhy and Mario Parker

(Bloomberg)

White House talks about overhauling the U.S. biofuel mandate are buoying the hopes of refinery workers who fanned out across Capitol Hill on Wednesday to press for changes.

Thirty United Steelworkers members from more than a dozen independent oil refineries are lobbying lawmakers and Trump administration officials in the wake of a Philadelphia refinery bankruptcy they say could be the first of several amid mounting costs to satisfy annual biofuel quotas.

The workers say aides and lawmakers have a better awareness and understanding of the issue following the bankruptcy of Philadelphia Energy Solutions LLC. The White House could have another meeting on the issue as soon as Thursday.

The workers are arguing for immediate Trump administration action to help rein in the cost of Renewable Identification Numbers, or RINs, the tradeable compliance credits that refiners use to prove they have fulfilled biofuel quotas under the Renewable Fuel Standard. Refiners can generate RINs by mixing biofuel into gasoline and diesel, but independent refiners without sufficient blending infrastructure must buy those credits from other refiners and traders instead.

The cost of biodiesel RINs in 2017 surged as high as $1.12, while those tracking ethanol reached 97 cents apiece. The cost for four of the largest independent refiners, including Valero Energy Corp. and Delta Air Lines Inc.’s Monroe Energy operation, reached $1.8 billion in 2017, up from $1.4 billion in 2016, according to data compiled by Bloomberg.

Senator Ted Cruz, a Republican from Texas, has proposed policy changes that would effectively cap the price of those RINs, such as through the Environmental Protection Agency selling a cheaply priced alternative: newly created ethanol waiver credits that aren’t tied to a blended gallon.

In a series of White House meetings, President Donald Trump has explored the possibility of pairing a Cruz-style cap on RIN prices with a policy change to lift summertime restrictions on the sale of gasoline containing 15 percent ethanol in areas where smog is a problem. But ethanol advocates, including Senator Chuck Grassley, a Republican from Iowa, have argued that a RIN price cap would destroy demand for corn and drive down prices.

The managers of 150 biofuel production facilities sent a letter to Trump on Wednesday urging him to reject any credit cap, which they cast as one of several “misleading schemes designed to kill the RFS.”

“There is no way to cut, cap or eliminate RINs without cutting, capping or eliminating gallons of homegrown fuel,” the industry representatives said.

But refinery workers insisted that quick action is essential. “A cap could offer immediate relief,” said Jerrad Gonzales, an employee at Valero’s McKee refinery in Texas. Without swift changes, “you’re going to continue to see refineries struggle and, eventually, shut down,” he said.

The workers came to Washington to lobby from 11 states including Ohio, California, Wyoming, Texas and Utah — places far from the Northeast refining corridor that is the epicenter of the biofuel policy fight.

The issue is a national one, said Wayne Gilmore, who works for Valero’s Meraux refinery in Louisiana. “We’re all in this together. It’s PES first, and if something doesn’t change, then who’s next? It could be the domino effect.”



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