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On energy issues, remember forgotten America

On Oct. 15, the Trump administration unveiled a new agreement on the Renewable Fuel Standard (RFS) - a policy intended to secure America’s domestic energy production. The plan, which will expand renewable fuel quotas, is being touted as a win for U.S. farmers and proof that the president is a champion of rural America. 

But the President’s work on this issue isn’t done yet. While farmers can rest assured that Trump has their back, there is an entirely different segment of the American public that is crying out for relief: the forgotten blue-collar men and women the president also pledged to protect on the campaign trail.

Expanding renewable fuel mandates may help the president get votes in the farm belt, but he also can’t lose any supporters in other battleground manufacturing states, like Pennsylvania and Texas. He can do so by ensuring his new RFS changes benefit farmers and farmers only. Doing so would prevent the unholy alliance of Big Oil and Wall Street from manipulating the law and take his blue-collar base to the cleaners. 

Making big oil firms blend more renewables won’t cause them any heartache. However, without added reform measures, the current RFS deal will decimate small refiners, which employ thousands of blue-collar workers. The reason? Independent, local refineries don’t have the financial resources to blend onsite. 

Renewable fuel mixtures have a short shelf life and degrade quickly. So, biofuels typically have to be mixed onsite - the same location they’re pumped into consumers’ vehicles. But only the biggest of the biggest refiners, like BP and Shell, also serve as retailers and have the capability to mix onsite. And yet, other smaller refiners are still on the hook to produce renewable fuel, despite having no way to make it. 

This is where the Renewable Identification Numbers (RINs) come in. The government allows smaller refineries to purchase RINs credits from the big guys in lieu of mixing their own. A RINs credit is just a computer-generated serial number for every gallon of renewable created. So, what ends up happening is that Big Oil produces way more renewable fuel than it needs and sells its extra RINs credits to its local, independent competitors. 

Predictably, Big Oil and Wall Street have abused this system for financial gain. According to the New York Times, Wall Street has profited out of it - as RINs prices have become susceptible to market speculation. RINs used to cost pennies, but lately, prices have skyrocketed - reaching nearly $3 per credit in 2018. For some independent refiners, it is costing nearly half a million dollars a day just to comply with these government mandates - more than double the cost to purchase refineries. 

Now, with Trump’s new expansion of the renewable volumes, RINs are all the more ripe for speculation, and prices are bound to increase. Expanded ethanol quotas just mean local refineries will be forced to compensate by purchasing more RINs. This increased demand will yield a higher price for biofuel credits - and speculators, sensing an opportunity to profit, will bet on the price of RINs to increase. This, in turn, will force the cost of purchasing RINs even higher. Rinse and repeat. 

The first adjustment the president must make is to limit Wall Street’s speculation of these credits by imposing a cap on the price of RINs. Doing so would ensure that Wall Street profiteers don’t use this farmer victory for personal gain. A RINs cap would protect the president’s manufacturing base while ensuring that thousands of blue-collar workers aren’t thrown onto the unemployment rolls. 

Additionally, the president must ensure that hardship waivers for small refineries remain in place. These exemptions provide a slight reprieve to small refiners from the crippling weight of the Wall Street-Big Oil stranglehold. The RFS’ creators gave the EPA the statutory authority to issue them at the start of the program because they knew they protect America’s energy security while posing no harm to farmers. Indeed, agricultural economist Scott Irwin said that “the data now clearly shows that small refinery exemptions under the RFS have not reduced physical ethanol use.” They are absolutely necessary to the continued success of the American energy industry. 

By clamping down on special interests’ speculative behavior, President Trump can ensure the RFS system operates fairly and protects both sides of his base. The Wall Street and Big Oil interests may complain, but the president was elected to drain the swamp, not keep it filled. Here’s hoping he does the right thing. 


Matt Mackowiak is president of Austin, Texas, and Washington, D.C.-based Potomac Strategy Group. He’s a Republican consultant, a Bush administration and Bush-Cheney re-election campaign veteran and former press secretary to two U.S. senators. He can be reached at