Washington’s seemingly impassible gridlock is about to leave blue-collar workers holding the short end of the stick. The change announced by the White House last week to the nation’s biofuels policy will help farmers, but apparently at the expense of the working class. Moreover, it’s a far cry from the solution the administration originally sought.
Now more than ever, Congress needs to secure a long-term, win-win solution to the Renewable Fuel Standard that both promotes American energy independence and supports blue-collar, oil refinery workers who will be hurt by the change.
Oil refiners around the country are required to combine renewable fuel with transportation fuel to create what is called E10: a blended fuel made up of no more than 10 percent renewable fuel. The ethanol industry and farmers just secured a victory from President Trump on E15: a higher content of renewable fuel that could have devastating effects on refiners. Allowing E15 increases how much renewable fuel must be used with transportation fuel from 10 to 15 percent.
U.S. refiners unable to meet fuel blending standards must comply with the RFS mandate by purchasing renewable identification numbers (RINs) from fuel blenders or from larger refiners who own their own blending capacity. RINs are credits used for compliance and are the “currency” of the RFS program. They are generated from fuel blenders and can be bought by market participants and even Wall Street.
Small and independent refiners are feeling the squeeze thanks to Wall Street’s involvement in hiking up the costs of RINs. Burdening small and independent refiners with high-cost compliance measures only hampers their ability to employ hard-working Americans across the country and support their local communities.
In December, President Trump charged oil refiners and biofuels producers to find a solution to the RFS. The ethanol lobby argues that the waivers the Environmental Protection Agency granted small and independent oil refiners under the RFS destroyed ethanol demand. However, the research firm, Charles River Associates, released a report that contradicts this claim and found there is no relationship between the EPA’s waivers and ethanol demand.
Here in lies the problem: The U.S. has a limited refining capacity. If any single refinery reduces output, or shuts down altogether, other refineries would not be able to meet the demand in time, which, as Hurricane Harvey proved, could trigger severe gasoline price spikes. Countless jobs would be lost across the country and the middle class would be squeezed financially at the pump.
Earlier this year, Philadelphia Energy Solutions Inc, the largest East Coast refiner, filed for bankruptcy. The reason? The effort to comply with the unworkable RFS standards were too high. The EPA said more refiners applied for waivers this year than before; a sign the RFS burden is reaching a tipping point, potentially causing a cascade of other Philadelphia Energy Solutions-like companies to file for bankruptcy.
Blue-collar workers are the backbone of President Trump’s strong base and they need him now more than ever to ensure the forgotten man is no longer forgotten. Together, the president and Congress must push for a solution that significantly reduces the impact of high RIN prices while continuing to support ethanol production for sale at home and abroad.
These Americans need a deal and the president must make sure blue-collar workers are not on the losing end.
Peter Roff is a Washington commentator who appears regularly on One America News. He is a former senior political writer for United Press International and contributing editor at U.S. News and World Report. Email him at RoffColumns@gmail.com. Follow him on Twitter @Peter Roff.