OPIS Biofuels Headlines

February 28, 2017
Pending Order to Change RFS Point of Obligation 'Not Negotiable': RFA CEO

The White House is expected to issue an executive order that would move the Renewable Fuel Standard's compliance obligation from refiners to position holders at the terminal, the Renewable Fuels Association said Tuesday, adding that it has been informed that the directive is "not negotiable."

"We received a call from an official with the Trump administration, informing us that a pending executive order would change the point of obligation from refiners to position holders at the terminal, a potentially small increase in the number of obligated parties, but one which would distribute the obligation more equitably," RFA President and CEO Bob Dinneen said in a statement. "Despite our continued opposition to the move, we were told the executive order was not negotiable."

RFA's statement came after Bloomberg reported late Monday that RFA and billionaire investor Carl Icahn had presented a deal to the administration that would move the point of obligation to the fuel terminal rack. RFA, which has opposed the move, would support the shift in return for an RVP waiver that would permit E15 to be sold year-round, according to the report. Dinneen told Bloomberg that he was told in "no uncertain terms that the point of obligation was going to be moved and I said I wanted to see one of our top agenda items moved."

The Bloomberg report led to a sharp sell-off of Renewable Identification Numbers (RINs) Tuesday morning. Ethanol RINs for 2017 were most recently heard traded as low as 30cts/RIN, down from 47cts/RIN on Monday.

"Our top priority this year is to ensure consumers have year-round access to E15 (15% ethanol) and we would like the Trump administration to help cut through the red tape on this unnecessary regulation," Dinneen said in the statement.

"Consumers are being denied access to the fuel blend due to EPA's nonsensical disparate treatment of E10 and E15 with regard to volatility regulations, preventing E15 from being sold during the summer. We will continue to do everything we can to ensure consumers have access to the lowest cost, cleanest, highest octane source of fuel in the world, and to ensure a strong RFS is maintained."

Growth Energy Monday evening condemned reported efforts to strike a deal, saying such a move would "irreparably change" the RFS.

"In exchange for getting his company an exemption for its responsibility under current law, Mr. Icahn has allegedly promised support for a Reid Vapor Pressure (RVP) waiver from the EPA, a change that already has strong bipartisan support because it is a common sense solution that would increase summer sales of higher ethanol blends," Skor said. "Any assertion that this tradeoff would 'greatly expand the market opportunities for ethanol' is simply untrue. An RVP waiver means little if retailers no longer have an incentive to sell higher ethanol blends. This would halt and likely reverse all the progress we've made with hundreds of gasoline retailers who now offer consumers higher blends of ethanol.

Changing the point of obligation impacts hundreds, if not thousands of new parties, demanding new rules, new staff, and new infrastructure. Moreover, the EPA is ill-equipped to manage such a large-scale restructuring of fuel markets, which could mean turmoil for retailers, higher costs for consumers, and years of uncertainty for hundreds of thousands of workers in the biofuel industry."

--Jordan Godwin, jgodwin@opisnet.com

--Michael Schneider, mschneider@opisnet.com

Copyright, Oil Price Information Service

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