Why is Andrew Wheeler’s Environmental Protection Agency continuing to ignore science and intervene in the economy, rigging the marketplace to put the interests of the ethanol lobby before the needs of the American people?
Congress created the Renewable Fuel Standard, which mandates the blending of corn ethanol, cellulosic biofuel, and advanced biofuel into America’s fuel supply to protect the environment, but studies — even ones from the EPA — suggest it has made things worse, reducing air quality by increasing atmospheric pollutants. Both Democrats and Republicans acknowledge the extent of the problem, with some of the law’s original, most passionate supporters now calling it a mistake. Yet, thanks to Wheeler’s EPA, it’s now getting bigger. In a massive blow to President Trump’s industrial base, the agency recently elevated the volume requirement for advanced biofuel and total renewable fuel in 2019 by a whopping 630 million gallons.
What was the EPA thinking? Sure, the president has promised to protect American farmers, and while he has done so through lifting unnecessary regulations, this latest move by his EPA puts more red tape on the backs of American consumers and businesses, particularly the U.S. manufacturing sector that he similarly vowed to restore. Increasing the amount of ethanol needed in American fuel may have a negative impact on the environment, inflict rising pressure on gas prices, and cause trouble for many engines not accustomed to this type of fuel mix; however, this ever-increasing government mandate hurts no one more than refineries in the Northeast.
Infusing ethanol into fuel is not a simple process. Because the mixture degrades quickly, creating it on-site, shortly before it makes it into consumers’ automobiles, is the only effective way to create the blend. This may be a simple enough task for such direct-to-consumer companies as BP and Shell, which control most of the country’s blending facilities, but it’s a complicated one for everyone else.
And yet, the EPA still forces all refineries to take part in the process. The government assigns every gallon of approved renewable fuel a tradable credit number, known as a RIN, of which each refinery must possess a specified quantity to remain compliant with federal law. The result has been what Bradley Olson at the Wall Street Journal described in 2016 as “a multibillion-dollar windfall for some of the world’s biggest oil companies,” especially BP, Chevron, and Shell, which produce significant amounts of renewable fuel and sell their surplus RINs credits to the small refineries that can’t produce the mix themselves. At the time of writing, Olson suggested that Chevron, Shell, and BP were on pace to make more than $1 billion annually just from selling credits. Naturally, refineries must buy what they are selling, and as a result, many small and independent northeastern companies are struggling to make ends meet. Some, such as Philadelphia Energy Solutions, which spent $300 million — twice its payroll costs — on RINs in 2017, have filed for bankruptcy or are considering doing so.
Clearly, this is a major problem that requires addressing. That is why just before the midterm elections, Pa. Gov. Tom Wolf petitioned the EPA "to reduce the nationwide renewable fuel volume mandate in order to address the economic difficulties faced by refiners in Pennsylvania and elsewhere in complying with this mandate.” Instead of listening to him and moving the ball forward, Trump’s EPA turned a blind eye and took the crony way out, making a severe economic issue worse.
If the president leaves all the decision-making to the bureaucrats at the EPA, the status quo will never change. While the case has been closed on 2019’s renewable blend levels, the Trump administration can still try to right the ship and protect its industrial base by imposing a cap on the price of RINs, as the president reportedly suggested earlier this year, or coming to terms with another commonsense reform plan. The White House should plan to do so as soon as possible. Washington has ignored the forgotten men and women for long enough.