By George J. Damiris, President and CEO, HollyFrontier Corp from thehill.com.
What happens when the best of intentions leads to flawed governmental regulations? In most cases, the answer is loss of jobs, higher costs for consumers and the failure of the regulation to meet its objectives. These unintended consequences should be expected if the U.S. Environmental Protection Agency (EPA) does not amend its Renewable Fuel Standard (RFS) mandate.
Under the RFS, petroleum refiners and importers of petroleum products are required to blend biofuels with their gasoline and diesel fuel, regardless of their ability to do so. Refiners that do not meet the minimum blending requirements must purchase Renewable Identification Number (RIN) credits to satisfy compliance with the EPA.
Unlike other credit systems overseen by the EPA – in which companies pay the EPA directly – RINs must be purchased on the open market or from other companies that blend biofuel. This significant loophole in the RFS has created an estimated $20 billion unregulated market that provides windfall profits for Wall Street hedge funds, large integrated oil companies, and large retail gasoline station owners (retailers) while jeopardizing the future of independent refiners and small retailers.