Environmental Protection Agency, Scott Pruitt, fielded questions in an oversight hearing
before the Senate Environment and Public Works Committee. The hearing, which took
place on Capitol Hill, centered around the biofuel industry and how, in particular, recent
biofuel legislation was affecting its producers across the country.
Biofuel advocates and environmental groups alike were concerned about President
Trump’s appointment of Pruitt to head the EPA; and their concern continued after Pruitt
voiced concerns that the US biofuels policy caused the bankruptcy of an East Coast
refinery.
Philadelphia Energy Solutions, the largest oil refiner on the East Coast, filed for
bankruptcy this January and Pruitt cites the bankruptcy as a result of the US policies on
biofuels. Philadelphia Energy Solutions specifically blamed the cost of keeping up with
the Renewable Fuel Standard – a minimum barometer set forth by the EPA requiring
refineries to blend increasing amounts of biofuels into their gasoline and diesel.
In an interview with Fox News, Pruitt claimed the company’s demise was due in large
part to the Renewable Fuel Standard, and he further blamed the program’s benchmark
that refiners like Philadelphia Energy Solutions purchase or earn biofuel blending credits
to prove to the EPA that they were keeping up with the minimum blending requirements.
As a result, Philadelphia Energy Solutions owed the EPA an estimated $185 million for
biofuel blending credits at the time of their bankruptcy.
Pruitt advocates a more conservative approach to the Renewable Fuel Standards which
would ease the burden on refiners. For example, Philadelphia Energy Solutions is not
the only refiner feeling pressure—Texas’s Valero Energy Corporation has also
complained about the high cost of blending credits, the price of which has substantially
increased recently. Ethanol advocates are frustrated with Pruitt’s take on the
Renewable Fuel Standard and have voiced concerns about the effect that reform will
have on US farmers relying on ethanol demand to earn a living.
Among other topics broached during the hearing were the year-round sale of E-15; the
introduction of sorghum as a source of ethanol; and the need for higher octane fuels.
Pruitt said that the EPA has long been focused on the automobile end of the equation
rather than the “fuel side of the ledger”—and higher octane fuels are an avenue worthy
of exploration.
Pruitt’s stance on fuel legislation seems to be fair-minded – it isn’t just about farmers
and biofuels advocates; refineries and retailers ought to be considered when legislation
affecting fuel is considered. Hopefully, there are not many more refiners like
Philadelphia Energy Solutions buckling under the pressure to comply with the
Renewable Fuel Standard. Pruitt may not have the support of the ethanol lobby, but it
is certainly promising that the head of the EPA is willing to sympathize with the refiners
that are bearing the burden of the Renewable Fuel Standard. Time will tell how this
conflict is resolved.