refineries
Tom Shepstone
Shepstone Management Company, Inc.
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Mark Mathis rings the alarm over America’s loss of refineries, caused by Renewable Fuel Standards that have yielded yet another “green energy” scam with RINs.
Our friend, Mark Mathis, at the Clear Energy Alliance, has produced one of his best videos yet, this time focusing on our nation;’s Renewable Fuel Standards (RFS), which is another green energy scam designed to ensure corn growers in the Mid-West have a market for ethanol. Ethanol, of course, is completely uneconomical and the product will destroy many of the engines in which it used. Ask you lawnmower repair guy if you doubt me. But, as Mark explains, that’s the least of the problems because the RFS and its phony money in the form of RINS are forcing the closure of refineries critical to our American energy independence.
Here is the video:
As you know, when Mark posts his videos YouTube, he always includes the transcripts, too. Here is the one accompanying the above video:
Have you noticed? Higher prices at the pump. Fuel shortages. The loss of independent refineries and high-paying jobs. Higher fuel imports. And, our national security is being compromised. What the heck is going on here?
Well, it’s the collateral damage caused by the Renewable Fuel Standard, or RFS. The RFS is a government program that is now having the opposite effect of what Congress intended it to do. Unless the EPA and congress take action, it’s going to get a lot worse.
Like all government programs, the Renewable Fuel Standard began with good intentions. Back in 2005 we were rightfully concerned about increasing oil imports. So, congress passed the RFS requiring ethanol to be blended into gasoline to reduce our foreign oil dependent.
But then the shale revolution made America the largest oil and natural gas producer
in the world. When that happened the RFS should have been dramatically
changed, but, instead, it became the problem.
Here’s why.
Under the Renewable Fuel Standard oil refineries are forced to either blend fuels or purchase Renewable Identification Numbers or “RINS.” RINs identify the amount of ethanol being blended into the gasoline and
diesel that refineries produce. In the beginning, the RINs were only a few cents each.
But, as per usual, the government program distorted the market, and the cost of RINs exploded. RINs are now so expensive, they threaten to put most independent refiners out of business. Eight refineries shut down or announced closing in 2020 alone resulting in the loss of thousands of jobs that provide huge economic benefits to the communities they serve.
In 2018, the largest refinery on the east coast cited the cost of RINs as the major factor in its bankruptcy. This is a big deal. Diversity of fuel supply matters, a lot!
Remember the Colonial Pipeline Hack? Within days, about half of the gas stations in North Carolina, Georgia, South Carolina, and Virginia were out of gas. This very real national security threat was exposed for all the world to see. Suddenly, people realized it’s not such a good idea that one pipeline from Texas is supplying roughly half of thegasoline needed on the eastern seaboard.
But that’s what happens when there aren’t enough refineries producing fuel where it’s needed. Overpriced RINs are undermining the reason the RFS was created. But it’s even worse than that. Independent refineries should never have been forced to buy RINs in the first place.
They don’t blend ethanol into the fuel supply. They can’t. It’s too corrosive. Ethanol blenders do that work just prior to fuel going to gas stations. This backward structure has created a situation where blenders and Wall Street traders have no incentive to control the cost of RINs because they are the ones making loads of cash on the high prices.
And here’s another unintended consequence: The RFS has resulted in foreign biofuel producers cashing in with imports! 475 million gallons in 2020 alone. This is the opposite of what the RFS was designed to do.
There are even more problems, but let’s talk solutions. In the short-term, EPA should reduce the total volume of mandated ethanol blending in order to quickly lower RIN prices to a reasonable level. Many state governors have already requested this relief.
Keep in mind… reducing that mandate won’t actually lower the amount of blending being done in the real world because we still need ethanol to provide higher levels of octane in our cars and trucks anyway.
Once that’s done, EPA needs to move quickly to fix this broken program permanently. EPA could require that benders, not refiners, be responsible for handing RINs, which makes much more sense because blenders
are the ones that manage the RINs in the first place!
Or EPA could give refiners the option to purchase low-cost RINs directly from the government if they can’t find reasonably priced RINs elsewhere.
There are other potential solutions, but the point is, the EPA and Congress need to fix this problem that they created. We can’t afford to lose any more refineries. Our fuel supply should be coming from as many locations as possible for America’s economic and national security.
EPA and Congress, do your jobs. Provide refiners immediate relief and then fix the Renewable Fuel Standard once and for all.
For the Clear Energy Alliance, I’m Mark Mathis.
Thanks, Mark! Power on!
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