[NEWS] Ethanol Mandates Mean Big Profits for Big Oil
– by Bob Adelmann, October 28, 2016, The New American
When the Energy Independence and Security Act of 2007 was signed into law by then-President George W. Bush, it was well-intended: It would increase America’s oil independence and reduce dependence on foreign oil, it would produce cleaner air, and it would help farmers.
The Act required refiners to add ethanol to every gallon of gasoline they produced. If a refiner decided it couldn’t (too costly) or wouldn’t (internal decision) do so, it would be required to buy ethanol credits. Those credits, called RINs (for Renewable Identification Numbers), are now being traded and reaping hundreds of millions of dollars in gains for the big oil companies. According to the New York Times, the Act has “inadvertently become a multi-billion-dollar windfall for some of the world’s biggest oil companies.”
Specifically, Chevron, Royal Dutch Shell, and BP (British Petroleum) could reap more than $1 billion in profits just by selling those RINs on the open market. This is raising the cost of those refiners who must now buy those RINs in order to comply with the law administered by the EPA. Some may be forced to cut back production, lay off workers, or declare bankruptcy. Which will, of course, come back to cost the consumer, as noted by George Damiris, the CEO of HollyFrontier, a Midwestern refiner: “The consumer is paying more and it’s ending up in the pockets of retailers, major oil companies, or speculators. Over time, if this goes uncorrected, people will basically be put out of business.”