No news is good news for refineries

Source: By Kelsey Tamborrino, Politico • Posted: Tuesday, June 12, 2018

While corn-state Republicans thanked the president last week for squashing proposed changes to the Renewable Fuel Standard that would have sharply increased Renewable Identification Numbers in the market, experts tell Pro’s Eric Wolff it’s oil refiners who are reaping the rewards of the stalled deal. While refineries say the increase in RINs is necessary to bring down their cost of compliance, the dozens of economic hardship waivers already issued by Pruitt to small oil processors has pushed the cost of those credits to their lowest levels in five years — and without a biofuels deal those waivers will stay in place for now, Eric reports.

“No deal allows the EPA to continue to implement actions as they see fit, and those have been benefiting refiners,” said Andy Lipow, an oil industry analyst with Lipow Oil Associates. “[Pruitt’s] actions are geared toward helping manufacturing, and the oil industry is just one of the many he’s been helping through the deregulation process.”

But while those waivers have helped bring RIN prices down, ethanol producers complain it removes an incentive for oil industry players to develop new infrastructure to increase fuel blending. Brooke Coleman, executive director of the Advanced Biofuels Business Council, suggested Pruitt was pushing the limits of the program without concern that the changes could be cut down in court, as scandals mount around him. 

“At the end of the day the political cost of all of this stuff ultimately falls on an administration that is unlikely to include him,” Coleman said. “One has to wonder if his systematic dismantling of the RFS is something that comes to his benefit and to no one else and that’s fine with him.”

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