Author Topic: Trump to repeal the Big Refinery tax?  (Read 550 times)

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Offline IsailedawayfromFR

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Trump to repeal the Big Refinery tax?
« on: May 19, 2017, 08:25:21 AM »
Good news: If President Donald Trump is true to his word, the price of gas at the pump is about to get significantly cheaper.

Multiple reports state that Trump is considering changing the point of obligation of the Renewable Fuels Standard (RFS) so that major oil companies can no longer take advantage of the American people.  Let's hope he does, because the point of obligation in its current form has done nothing but shuffle wealth from the rich to the poor.

Today, the RFS requires that all transportation fuels have a minimum volume of renewable fuels.  Right now, that "point of obligation" is set at 10 percent ethanol, something most of us see posted clearly on the gas pumps.  Once the fuel is blended, a Renewable Identification Number (RIN) is assigned to the mixture before it is ready to be sold.

But herein lies the problem: complying with this ethanol mandate – in effect, an unnecessary hidden tax on production – is much easier for the biggest gas station chains, which can do so at a 10- to 50-percent price advantage over smaller manufacturers.  This forces the smaller manufacturers to buy RINs from the bigger ones.  Essentially, they are just purchasing government credits from large refineries stating that they have supplied an approved amount of renewable fuel even though they did not actually do any of the renewable production themselves.

As a result of this protectionist "Big Refinery tax," the cost of RINs has appreciated by as much as 5,000 percent since the point of obligation's creation – 20 times the cost of a gallon of ethanol – and price volatility has unfortunately become a pillar of this program.  Smaller manufacturers have had no choice but to shuffle the costs associated with this hidden production tax onto American consumers in the form of higher gas prices.
I know he campaigned to preserve ethanol, but it would mean even more if he just did away with the mandate instead of just pushing it around.
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Re: Trump to repeal the Big Refinery tax?
« Reply #1 on: May 19, 2017, 08:33:26 AM »
I am pretty sure that repealing a tax needs Congressional action, this is a regulation.

The ethanol mandate needs to be abolished
« Last Edit: May 19, 2017, 08:34:06 AM by geronl »

Online endicom

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Re: Trump to repeal the Big Refinery tax?
« Reply #2 on: May 19, 2017, 11:22:11 AM »
Not enough Pubs would go along with killing the ethanol mandate but this should be doable. And be popular if gasoline prices drop and the Pubs crow about it.

Would this require but a change in EPA rules? If so then let's get it done.
« Last Edit: May 19, 2017, 11:28:34 AM by endicom »

Offline thackney

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Re: Trump to repeal the Big Refinery tax?
« Reply #3 on: May 22, 2017, 10:48:12 AM »
Don't Change the RFS Point of Obligation

One of the President-elect’s earliest supporters, largest donors and closest advisors, Carl Icahn, wants the Environmental Protection Agency (EPA) to rig the system in favor of one of his largest investments.  Mr. Icahn’s problem is with the Renewable Fuel Standard (RFS), which requires refineries to blend increasing amounts of renewable fuels like ethanol and biodiesel into the nation’s fuel supply. Under the RFS, the EPA designated refiners and importers as “obligated parties” because placing the obligation on a smaller number of parties with significant assets generally results in a more efficient and effective program. Mr. Icahn claims this is costing CVR Energy - the refinery in which he owns an 80% stake - $200 million a year. Icahn and a small group of refineries want EPA to shift that obligation downstream to independent blenders and retail gas stations.

Investors are betting that Mr. Icahn has the President-elect’s ear, but as a candidate, Trump vowed to protect the RFS. Shifting the point of obligation would not only be a significant market interference - it would make it nearly impossible for the President-elect to keep several of his campaign promises - particularly fostering domestic energy independence, ensuring low energy prices and reducing the size and scope of the EPA....

...Gas is a commodity with the free market determining the spot price. Small operations like ours compete with major refiners every day to sell retail fuel to consumers at the lowest possible price. Moving the point of obligation eliminates our ability to compete and gives major refiners a significant unfair advantage over small businesses in small markets across the country. Liquidity and competition are what keep fuel prices low. If we obligate blenders and retail operators, liquidity would be squeezed out of the market, killing competition. We chose to make significant infrastructure investments in railroad logistics, terminal blending expansion and retail blending at the pump - enabling us to blend renewable fuels. Those investments have created lower cost fuel options for consumers and created jobs.  If we are forced to buy from refiners, we lose the ability to buy fuel in the open market and compete with refiners on price. Once that happens, we will be forced to stop shipping to other terminals. Once pipeline shippers like us start leaving markets like we have in California – refiners will lose a major competitor and fuel prices will go up....
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