Repealing the RFS Is Still the Best Answer

Following a meeting on Friday, reports are that Agriculture Secretary Sonny Perdue and EPA Administrator Scott Pruitt have put together a four-part proposal to address some of the damaging effects of the Renewable Fuel Standard (RFS). The proposal seeks to resolve a months-long standoff between Senators like Ted Cruz (R-TX) and Pat Toomey (R-PA), who represent states harmed by RFS mandates, and the small coalition of Midwestern Senators whose biofuel manufacturers subsist because of this illogical, market-distorting program. A jolt to get this proposal put together came last month with the bankruptcy of Philadelphia Energy Solutions (PES), a Philadelphia-area refiner who blamed the prices of RINs (Renewable Identification Number) for their bankruptcy. RINs are the compliance mechanism for the RFS: in order to meet mandated levels, every refiner must collect sufficient RIN credits, whether by producing biofuel or purchasing RINs from other sources. RIN prices have increased in recent years, putting strains on refiners. For example, in its bankruptcy announcement, PES noted that the company spends more on RINs (meaning compliance with government edict) than it does on all payroll costs for its employees.