Don't Change the RFS Point of Obligation
http://www.realclearenergy.org/articles/2016/12/20/dont_change_the_rfs_point_of_obligation_110151.htmlOne 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....