Time has come to overhaul RINs, Cruz tells Philadelphia refinery workers
US Sen. Ted Cruz (R-Tex.) called for a cap on the price of renewable identification numbers (RIN) to halt speculation and preserve jobs at refineries. "We're here because the jobs, and the men and women whose livelihoods and families depend on those jobs, are at risk from a broken government regulation system that isn't working, and that we have to fix," he said a Feb. 21 rally at Philadelphia Energy Solutions (PES).
PES cited dramatically higher prices for the renewable fuel credits the Environmental Protection Agency administers when the refiner declared bankruptcy nearly a month earlier (OGJ Online, Jan. 23, 2018). "In the year 2012, this refinery-the largest refinery on the East Coast-paid about $10 million for RINs. Then the RINs market broke. The price skyrocketed from 1-2¢ each to as high as $1.40 each," Cruz said.
"This means that last year, in 2017, this refinery spent $218 million buying RINs. That is more than double the payroll of the men and women sitting here," Cruz said. "Now, how many think the refinery should be wasting money on government licenses that don't pay a damned thing rather than paying your salaries? It doesn't make any sense. It is nuts."
Cruz said capping RIN prices at 10¢ each would need to occur alongside removing barriers so ethanol producers could sell more, not under a federal government mandate but in response to growing market demand. "It's worth understanding [that] right now in Washington, this is all tied up in politics of Big Corn and Big Ethanol. A bunch of these companies don't want to see any change," he said.
"Here's the crazy thing: Of the $218 million [PES] paid for RINs, do you know how much ended up in the pockets of Iowa corn farmers? None. The money doesn't go to the corn farmers, and it doesn't go to the ethanol producers. Instead, billions [of dollars] are being made by Wall Street speculators and giant integrated companies that are earning a windfall on this broken regulatory system," Cruz said.
Cruz noted that when he brought nine other senators to meet with President Donald Trump at the White House to discuss the RINs problem in December, he emphasized that this isn't a tradeoff between refineries and corn farmers. "There is a win-win solution where we can fix RINs, save the jobs of refinery workers, and also let farmers sell more corn and get the government out of the way," he said.
"The role I'm trying to play in the Senate is to help find that solution," Cruz said. "In Texas, we have 27 refineries, 22 of which are hurt directly by the high RIN prices. There's a solution that doesn't hurt ethanol producers and helps refineries: getting rid of EPA barriers and letting farmers sell as much ethanol as the market needs."
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
