Cruz rallies refinery workers for ethanol mandate change

Sen. Ted Cruz (R-Texas) on Wednesday went to a massive Philadelphia oil refiner to rally its workers for changes to the federal ethanol mandate.

Philadelphia Energy Solutions, the East Coast’s largest refiner, filed for bankruptcy last month, blaming the costs of complying with the Renewable Fuel Standard.

Cruz wants to put a cap on the costs of Renewable Identification Numbers (RINs), the Environmental Protection Agency’s (EPA) tradeable credit system for complying with the mandate that refiners blend ethanol and other biofuels into the traditional fossil fuels.

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“There is a win-win solution where we can fix RINs, save the jobs of the refinery workers and also allow corn farmers to sell more corn and get the government out of the way of the success of both of them,” Cruz told the boisterous campaign-style rally in South Philadelphia.

“We can fix this broken system, end the massive tax from the broken RINs system and at the same time allow corn farmers in a free and fair market to sell even more corn, and for them to prosper as well,” he said. “The ones who will be put out of business are the speculators, who can go and speculate on something else.”

Philadelphia Energy Solutions doesn’t have the facilities to blend biofuels into its products, so it must buy credits.

Due to market trading, the credits jumped from a few cents per gallon shortly after the mandate started to as much as $1.40 per gallon last year, costing the refiner $218 million last year, more than double the cost of payroll.

“It doesn’t make any sense. It is nuts,” Cruz said. Cruz’s proposal would cap the cost at 10 cents.

President Trump ran for office pledging to fully support the Renewable Fuel Standard as it stands now. But he told Republican senators he met with in December that he would consider supporting a change to the Renewable Fuel Standard if both oil-friendly and corn-friendly senators agreed to it, and if it originated with them.

EPA Administrator Scott Pruitt, meanwhile, has said in recent media appearances that he would support some sort of change.

“We need RIN reform,” Pruitt said on Fox News this month. “It is something I’ve talked to Congress about.”

The ethanol industry was sharply critical of Cruz’s rally. They say the threat refiners face from the mandate is overblown, and Philadelphia Energy Solutions’s problems were far bigger than the ethanol standard.

Reuters reported Tuesday that one of the main problems at the refiner was massive payments it made regularly to Carlyle Group and other owners of the company. 

“Sen. Cruz’s efforts to secure a so-called win-win solution to protect refining jobs are entirely misdirected,” said Bob Dinneen, president of the Renewable Fuels Association. “His proposal to cap RIN prices would not protect these workers, and would most-assuredly risk agricultural jobs across the country. All Sen. Cruz is really protecting is corporate greed, because that’s what’s really at the heart of PES’s financial problems.”