Over the course of the last several months, dozens of businesses in Pennsylvania, New Jersey and Delaware, ranging from providers of refinery and industrial maintenance services to family-owned manufacturing companies, wrote to their elected representatives in Congress, urging them as well as the Biden Administration to take swift action and reform the Renewable Fuel Standard (RFS).
In their letters, these regional business owners and employers all expressed a common sense of concern for the region’s refining industry, citing the out-of-control compliance costs squeezing independent refineries under the RFS. These costs not only threaten the existence and economic livelihoods of local refinery jobs, but also that of thousands of other jobs across the supply chain who would be negatively impacted, should the tri-state region’s refineries be forced to close their doors for good.
“Without swift and meaningful action by the Biden Administration, our region’s last remaining oil refineries may close their doors forever, eliminating hundreds of direct jobs and causing irreversible reverberations in our region that will impact thousands of indirect jobs, like those provided by our company,” wrote Glenn J. Beachy on behalf of Flowserve, a manufacturing company with employees in Pennsylvania and throughout the tri-state area.
When refineries struggle or close, the rest of the local economy suffers due to the direct and indirect impacts of layoffs from refineries throughout the region.
So, just how much of an impact does the region’s refining industry have on job creation and preservation?
According to a 2011 study performed by the Commonwealth of Pennsylvania, each refining job in southeastern Pennsylvania has what is referred to as a “large multiplier effect” on the regional and national economy, supporting an estimated 18.3 jobs in southeastern Pennsylvania, 22 jobs in Pennsylvania statewide, and 61 jobs nationwide. This means that Pennsylvania-based Monroe Energy alone supports supported over 9,000 indirect jobs in southeastern Pennsylvania, and nearly 35,000 nationally.
In the wake of the economic downturn resulting from the COVID-19 pandemic, these jobs—and the economic benefits they create—are needed now more than ever.
For years, independent refineries have been forced to purchase Renewable Identification Numbers (RIN) credits at exorbitant costs, skyrocketing from just a nickel per credit when the RFS was originally implemented, to almost $2.00 per credit in mid-2021. These compliance costs now run into the hundreds of millions of dollars annually, and refiners are now spending more on RFS compliance than they do on salaries, benefits, and capital expenses combined. This clearly represents a direct threat to thousands of family-sustaining jobs throughout Pennsylvania, New Jersey, Delaware and beyond.
The economic strain shouldered by independent refineries in the Northeast has a lasting and long-reaching ripple effect, impacting thousands of jobs across America. Reining in the price of RINs is a critical step in reforming the RFS and protecting the thousands of jobs at stake, both directly and indirectly, not just in Pennsylvania, New Jersey, and Delaware, but nationwide. Without immediate action from President Biden and his Administration, businesses who rely on independent refineries, will continue to suffer the negative consequences of the broken RFS system.
“Most businesses can adapt to significant costs if those costs are stable, transparent, and predictable. Unfortunately, due to external manipulation, the RINs market is none of these. I have no doubt the local independent refiners can thrive if the RIN market is reformed so these costs are less than fuel and employment costs,” wrote Brian McCutcheon, President of Scientific Equipment Company, a southeast Pennsylvania-based equipment distributor.
The evidence is clear – thousands of hardworking men and women throughout the Delaware Valley and across the country are relying on the Biden administration to fix the RFS – and fast. President Biden and the EPA must heed the calls from these regional business owners, urging them to take action to reform the RFS, get the price of RINs under control, and protect the tens of thousands of jobs across America that rely on the independent refining industry.