Ethanol industry speaks out against PES anti-RFS rally

By Erin Voegele | February 21, 2018

On Feb. 21, Sen. Ted Cruz, R-Texas, spoke at a rally against the Renewable Fuel Standard hosted by Philadelphia Energy Solutions Inc., a refiner that recently blamed the RFS and renewable identification number (RIN) prices for its bankruptcy.

PES filed for Chapter 11 bankruptcy in January, blaming its financial struggles on costs involved in complying with the RFS. The ethanol industry and its supporters have argued that the RFS and RINs have minimal impact on the success of refineries, and have instead blamed the refiner’s financial troubles on poor management decisions and similar factors.  

Sen. Chuck Grassley, R-Iowa, has spoken out against the anti-RFS message of PES’s rally. “Every independent study shows the PES bankruptcy was due to management decisions that did not work out, not the Renewable Fuel Standard,” Grassley said. “PES knows this to be true, which is why it initially banned Reuters from attending today’s anti-RFS rally after Reuters released an analysis exposing the embarrassing truth. It sure looks like PES management and its private equity owners are scapegoating the RFS to distract from their own failings, which have risked the livelihoods of more than a thousand workers. PES should level with its employees, who deserve an honest explanation of the facts. Like the refining industry, America’s biofuels industry creates tens of thousands of middle class jobs that support families across the country. I’ve long advocated for an all-of-the-above strategy to help secure America’s energy independence. There’s no reason biofuels and other renewables can’t exist alongside conventional fuels.”

Several biofuel trade groups have also spoken out to dispute the information presented at the rally. “Ted Cruz seems more interested in the spotlight than facts,” said Emily Skor, CEO of Growth Energy. “If Mr. Cruz cared about jobs, he would support workers in the heartland who produce America’s homegrown energy and stop spreading falsehoods about the RFS. As the University of Pennsylvania explained and Reuters reported, workers at PES deserve real answers for the financial troubles facing the refinery, and that starts with investors who drained the company while other U.S. refiners flourished under the RFS.”

“Senator Cruz’s increasingly desperate publicity stunts do not change the fact that the problems facing Philadelphia Energy Solutions have nothing to do with the Renewable Fuel Standard and everything to do with mismanagement by the PES ownership group,” said Brian Jennings, CEO of the American Coalition for Ethanol. “In recent days, it has been disclosed by current and former PES employees that the Carlyle Group, a private equity firm that owns two-thirds of PES, prioritized cash distributions to shareholders over small investments that would have enabled the refinery to comply with the RFS. It is shameful that Senator Cruz is calling on Uncle Sam to bailout PES for mismanagement blunders when most U.S. refiners have been complying with the law. The ethanol industry has been crystal clear with anyone willing to listen that the win-win Senator Cruz claims to seek is to grant RVP relief for E15 and higher blends. This would increase ethanol blending and the RIN supply, bring down RIN prices, and keep the RFS statute intact.”

“Senator Cruz would blame U.S. biofuels for anything to get a headline, but that doesn’t make it true,” added Brooke Colman, executive director of the Advanced Biofuels Business Council. “The RFS has worked for over 12 years. It supports hundreds of thousands of jobs, including manufacturing jobs at over 200 biorefineries. Meanwhile, refiners like PBF and Valero are posting rising profits – with a potential 20 percent boost under the new tax bill. PES has problems, but the more policymakers learn about the situation, the more it looks like a smoke screen cooked up by refinery owners seeking a handout.”

“Senator Cruz’s efforts to secure a so-called ‘win-win’ solution to protect refining jobs are entirely misdirected,” said Bob Dinneen, president and CEO of the Renewable Fuels Association, “If he truly cares about the jobs at PES, he ought to focus his angst on the investors who sacrificed their own refinery for more lucrative investments, including construction of a pipeline that diverted low-cost domestic crude oil away from East Coast refineries and forced them to import more costly crude oil from places like Saudi Arabia and Nigeria. His proposal to cap RIN prices would not protect these workers, and would most-assuredly risk agricultural jobs across the country. All Senator Cruz is really protecting is corporate greed, because that’s what’s really at the heart of PES’ financial problems.”

“Again, the RFS is not the cause of PES’ financial difficulties,” Dinneen continued. “As numerous independent reports have concluded, the true causes of PES’ financial woes are: rerouting of lower-cost domestic crude oil supplies to Gulf coast refineries, antiquated technology, mismanagement, and lifting the crude oil export ban. The workers that gathered at this rally might be interested to learn that Sen. Cruz led the effort in the Senate to lift the crude oil export ban, which has far more to do with the refinery’s struggles than anything related to the RFS. As one worker at the rally noted, booming crude oil exports are harming Northeast refiners.”

“If lowering the price of RINs is deemed a necessity, however, there is indeed a win-win,” Dinneen said. “Expand the use of renewable fuel by undoing the unnecessary regulations on higher ethanol blends. That would be consistent with Sen. Cruz’s and the president’s regulatory reform agenda, while protecting jobs in both refining and agriculture.”