Ted Cruz attacks ‘government license’ in fight against ethanol

Source: By Ben Wolfgang, Washington Times • Posted: Wednesday, February 21, 2018

Sen. Ted Cruz on Wednesday will travel to Philadelphia for a battle in his war against the ethanol industry, meeting with workers at an oil refinery that says it faces financial ruin due to the federal biofuels mandate.

The trip, which will include a town hall meeting at the now-bankrupt Philadelphia Energy Solutions, is the latest in a series of aggressive moves by the Texas Republican as he tries to build opposition toward the ethanol industry and support for dramatically overhauling the federal mandate, known as the Renewable Fuel Standard (RFS).

The Philadelphia refinery has become the central flash point in the battle over ethanol, with Mr. Cruz and other critics saying the RFS is deeply flawed and is poised to wreak havoc across the oil refining sector. At the core of its problems, Philadelphia Energy Solutions argues, are federal credits known as renewable identification numbers, or RINs, which refineries must buy if they do not have the capability to blend ethanol with gasoline as required by federal law.

Those credits fluctuate in price, having skyrocketed from just a few cents to $1.40 a piece last year.

Mr. Cruz, who describes RINs as a “government license” to show compliance with the law, has seized on the Philadelphia site’s financial woes as ammunition in his effort to overhaul ethanol policy.

“Can you imagine running a business where you spend more than double your payroll to write a check not to buy anything, not to pay anybody, not to buy any supplies, but simply to purchase a government license, so to speak, that is crushing and it is destroying jobs,” he said recently during a Senate floor speech devoted to ethanol. “With respect to Philadelphia Energy Solutions, just now in bankruptcy, we’re talking about 1,100 jobs here. These are blue-collar, working-class jobs, the kind that are the backbone of our economy, the kind that keep refineries going.”

Wednesday’s trip will keep the spotlight on the RFS amid reports Mr. Cruz’s colleague, Sen. John Cornyn, also a Texas Republican, will soon release legislation aimed at reforming the RFS. The RFS was implemented in 2007 and requires increasing amounts of ethanol to be blended with gasoline each year.

The ethanol industry has pushed back hard against Mr. Cruz and against the idea that RIN prices are to blame for the financial problems faced by refineries.

Philadelphia Energy Solutions “has fallaciously blamed the RFS and RINs for its recent decision to seek bankruptcy protection, and now opponents of the RFS are using the bankruptcy as a key talking point in their campaign to reform or repeal the RFS,” the Renewable Fuels Association, the ethanol industry’s leading trade group, said in a press release ahead of Mr. Cruz’s trip Wednesday.

The organization, which increasingly has found itself in a bitter fight with Mr. Cruzand other pro-oil senators, also circulated research that it says proves RINs aren’t a serious problem for the refining sector.

For his part, Mr. Cruz’s opposition to the ethanol industry has led to collateral damage in Washington. For months, the Texas senator has held up the nomination of Bill Northey, Iowa’s secretary of agriculture, for a top post at the federal Agriculture Department. He’s demanded serious negotiations over the RFS in exchange for allowing the nomination to go forward.

Ethanol leaders say they’re willing to talk, but they’re pushing back hard against Mr. Cruz’s narrative that the Philadelphia refinery’s demise is because of their product. Such a narrative could prove devastating on Capitol Hill and in the court of public opinion.

“The refinery has antiquated technology and is captive to more expensive Brent crude oil imports because the elimination of the oil export ban and the new Dakota Access pipeline have cut off its supply of Bakken (Shale) crude,” Renewable Fuels Association President Bob Dinneen said last week an industry conference. “But it’s so much more expedient to blame ethanol.”

The refinery, and the United Steelworkers, which represents employees there, called those claims “dishonest.”