LETTER TO THE EDITOR: Defend the state economy; don’t mess with the RFS
What do a bankrupt oil refinery, a failed railroad depot and Sen. Ted Cruz have in common with our rural economy here in Indiana? If you’ve been following the news in Washington, it seems like a lot – and it all boils down to a transparent attempt to dismantle our country’s most successful energy policy, the Renewable Fuels Standard.
The Renewable Fuels Standard was enacted over 10 years ago under President Bush as a policy to give cheaper and cleaner-burning biofuels access to the marketplace. The policy helps reduce our country’s dependence on foreign oil by making fuel here at home – without subsidies.
Compliance with the program is managed through so-called RINs (renewable identification numbers) that are assigned when renewable fuel is blended by the oil refiner. They’re free – but refiners can buy, sell or trade RINs to demonstrate their compliance. For over a decade, this system has allowed renewable fuels to enter the tightly regulated market for gasoline.
Now some refiners who decided to not use biofuels are trying to get the government to change the law in a way that benefits their big oil backers at the expense of Indiana’s economy. It all started when Philadelphia Energy Solutions, the owner of the largest oil refining complex on the East Coast announced it would file for bankruptcy. Unsurprisingly, the company blamed biofuels and the rising cost of RINs for their financial troubles. It turns out that wasn’t the story at all.
According to Reuters, it was a failed railroad deal with the Carlyle Group, a global equity firm that bankrupted PES and not biofuels or RINs. In the deal, PES was required to pay $30 million every quarter for crude oil shipments by rail – even if oil didn’t show up. These payments bled the company dry.
Seeing an opportunity to gain favor with his big oil backers, Cruz pounced on the bankruptcy as a chance to attack biofuels.
What does all this mean for Indiana? We’re back to the Renewable Fuels Standard. To help oil refiners like the bankrupt Philadelphia Energy Solutions and preserve the big oil monopoly, Cruz is seeking to find allies in the Trump Administration and in the Senate to dismantle the Renewable Fuels Standard and the RINs system.
We shouldn’t let them.
The Renewable Fuels Standard is a crucial piece of Indiana’s rural economy.
With 14 bioprocessing facilities spread across the state, Indiana is the country’s fourth largest producer of ethanol. In total, the ethanol industry supports over 25,000 jobs and has a combined annual economic impact of $6.1 billion to the state’s economy.
It is more important than ever to protect and support our state’s rural economy.
The fact is that farmers are hurting because grain prices are too low – in many cases below the cost of production. As yields continue to rise, so are debt levels, which are now approaching what was seen during the 1980s farm crisis. The only solution is finding more markets for grain – primarily through increased usage of biofuels.
One easy way to increase the utilization of environmentally friendly biofuels is by ending outdated government regulations that prevent renewable blends like E15 from being able to be sold year-round.
E15 is approved for use in all vehicles model year 2001 and newer and enhances engine performance while allowing drivers to save money at the pump.
The good news for Cruz is that expanding the use of E15 will even expand the number of RINs available, further reducing costs.
The misguided effort by Sen.Cruz and others to dismantle the RFS will hurt Indiana. Senator Joe Donnelly and Sen. Todd Young should defend the Indiana rural economy and urge their colleagues and the administration to never mess with the RFS.
— Tim Phelps, central Indiana