November 21, 2022 - News outlets are honing in on the impacts of the Renewable Fuel Standard’s (RFS) broken compliance system, which has caused energy prices to skyrocket and fuel inventories to sink to record lows.
Independent refiners have reported paying more for RFS compliance credits called Renewable Identification Numbers (RINs) than all other operational costs combined, undermining their ability to budget for the future and eroding America’s refining capacity. The more independent refiners that close or convert to renewable fuel manufacturing, rather than having renewable diesel production add to traditional refining capabilities, the less refining capacity America possesses.
American consumers are unknowingly shouldering the costs of diminished refining capacity that is partly attributable to the RFS. News outlets are starting to take notice:
The Toledo Blade – “Estimates show that RFS compliance is raising retail fuel prices by approximately 30 cents per gallon, more than the national gas tax. Furthermore, the cost of RINs has contributed to eight refineries closing or announcing closure in the last two years alone. All that has occurred without increasing the amount of ethanol in the fuel supply.” 5 November 2022.
Bloomberg Government – “The cost to comply with the US renewable fuel blending mandates surged to $9.30 a barrel on Wednesday, the highest level since June 2021, according to data compiled by Bloomberg. [The] cost is equivalent to around 22 cents a gallon, adding to pump prices that are unseasonably high.” 10 November 2022.
New Hampshire Union Leader – “These [RFS compliance] credits increase cost for some independent refineries by nearly half a million dollars a day, which, in some cases, is more than double the price they paid to buy their entire businesses.” 14 November 2022.
Unachievable biofuel mandates have sent RIN prices soaring, incentivizing the production of biodiesel over traditional diesel, contributing to shortages:
Reuters – “A flood of U.S. renewable diesel plants set to come online in the next three years will not be enough to offset the loss of petroleum diesel refining capacity from plant closings since 2019, a Reuters analysis of federal data shows.” 21 June 2022
Commercial Carrier Journal - “Renewable diesel has steered conventional refining capacity away and has probably exacerbated the situation we're in with expensive diesel,” said Patrick De Haan, head of petroleum analysis at Gas Buddy.” 16 November 2022,
Alex Epstein – “Government biofuel mandates, including “blending” mandates, make the refining of diesel and other fuels more expensive—discouraging investment in greater diesel capacity, even though more diesel is needed around the world. To make matters worse, the Environmental Protection Agency announced new, increased mandates for fuel blending with biofuels for 2022 and denied waivers to small refineries, a measure that increases compliance costs to refiners and further discourages new refining capacity.” 10 November 2022.
High RINs prices are even discouraging fuel imports—placing more stress on America’s diesel supply chain.
Bloomberg Government – “High cost of renewable credits are also hurting importers who must buy RINs for each gallon of foreign fuel. RINs have rallied to their highest level since June 2021.” 10 November 2022.
As winter draws nearer, EIA data shows Northeast home heating oil prices are reaching nearly $6 a gallon partially due to the RFS. Independent refiners are among the chief suppliers of home heating oil – and they continue to face the prospects of financial ruin over the RFS’s broken compliance scheme. If more independent refiners close, U.S. home heating oil will become even more scarce and expensive.
The RFS has dire consequences for American consumers, who are already dealing with record inflation. As they try and navigate stormy financial conditions, the RFS is making gasoline, diesel, and partially home heating oil, more expensive for families nationwide. It also poses an existential threat to the remainder of America’s domestic refining capacity, threatening close refineries, eliminate union jobs, and strip away the nation’s energy independence.
On November 30, EPA has a chance set the RFS on the right track by issuing proposed biofuel blending levels at reasonable rates. Failure to do so will come at the expense of family-sustaining jobs, affordable energy, and America’s domestic energy economy.