According to Reuters, sources familiar with the matter said the EPA was currently examining 27 waiver requests from small refineries that cover several years. The sources say the EPA has had more refiners applying for waivers this year, based on the Trump administration’s anti-regulatory stance.
Based on the Reuters report, prices of the most popular renewable fuel credits, called RINs, dropped to 61 cents in early trading, a near record low and down from 64 cents at closing on Wednesday, say traders. Since 2013, the price of RINs has been all over the board, from 16 cents to nearly $1.50, with recent RIN prices falling into the low 60-cent range.
The waiver requests to the EPA are putting pressure on the Trump administration to help the oil industry, claiming the Renewable Fuel Standard (RFS) is costing the industry billions of dollars every year because refiners are forced to blend increasing volumes of biofuels like ethanol into gasoline and diesel.
Nasdaq is reporting the Trump administration and EPA have expressed concern for the refiners and are mediating talks between representatives of the oil industry and the ethanol lobby, however, the White House has largely sided with the corn-growing states with large Republican majorities.
Digital Journal reported earlier this week that Philadelphia Energy Solutions, the East Coast’s largest oil-refining complex, was filing for Chapter 11 bankruptcy – blaming the Renewable Fuel Standard, or RFS for their problems.
EPA’s authority under the RFS
When Congress established the Renewable Fuels Standard, or RFS through the Energy Policy Act of 2005, the Environmental Protection Agency was delegated the powers of establishing and implementing regulations for ensuring that the nation’s transportation fuel supply contained the mandated biofuel volumes.
The 2005 RFS, also called RFS1 was replaced by RFS2 in 2007 with the passage of the Energy Independence and Security Act. Both acts were legislated to ensure American jobs and less dependence on foreign oil.
When the first RFS went into effect, it mandated that a minimum of 4 billion US gallons of biofuels be blended into the nation’s gasoline and diesel supplies. That minimum usage volume was to rise to 7.5 billion US gallons by 2012. But that wasn’t enough, apparently because, with RFS2, the law increased the mandated volume of biofuels.
The RFS2 mandated a minimum of 9 billion US gallons of biofuels by 2008 with an expansion of the mandate to 36 billion gallons annually in 2022. Now that is a lot of corn, soybeans and whatever else is now being used to make biofuels.
EPA allowed to issue waivers
The EPA can grant waivers to small refineries with a capacity of under 75,000 barrels per day if the company can demonstrate financial hardship, but the EPA is reluctant to do this. In the four years before 2016, the agency only granted 29 waivers, and this averages about eight per year, according to Reuters.
However, according to a letter sent to Reuters from The Renewable Fuels Association (RFA), they are concerned that if the EPA relaxes its standards it would be violating the program’s goals of boosting use of renewable fuels.
“RFA is concerned that virtually any refiner with crude throughput of less than 75,000 barrels of crude per day could be granted the small refiner exemption – roughly 10 percent of all domestic refining capacity,” the letter, delivered Wednesday, said.
The letter also states the EPA must make sure that non-exempt refiners make up for the lost volume of renewable fuels that exempt refiners would have provided. There are some 53 refineries in the U.S. with a capacity of less than 750,000 barrels a day, and that includes some well-known companies, like Chevron Corp., and Andeavor.
