Oil refinery workers, executives and local politicians gathered near Philadelphia on Monday to urge the White House revamp the nation's renewable fuels program, arguing the future of their plants are at stake.
The U.S. renewable fuel program requires higher levels of ethanol and other biofuels to be blended into the nation's fuel pool, a requirement pitting the oil industry against the powerful farm lobby.
President Donald Trump has promised corn growers he would protect the program, while also signaling that he sympathizes with U.S. refiners who bear its costs.
The speakers told a crowd of about 100 that the tradable credits at the center of the renewable fuel program have been exploited by banks and trading firms, threatening the viability of merchant refiners like Monroe Energy and PBF Energy (PBF)
"Big oil companies and Wall Street investment firms are earning windfall profits and putting all this burden on the small, independent refiners," Jeff Warmann, chief executive of Monroe Energy, a subsidiary of Delta Air Lines Inc and operator of 185,000 barrel-per-day refinery outside of Philadelphia.
Warmann said speculators have driven up the price of the credits to the point his company spends $500,000 each day to comply with the program.
Ethanol supporters dispute the program is a problem, noting that the region's refineries were shuttering when credits traded at a pennies a piece.
"Big Oil needs to stop scapegoating the RFS and get about the business of providing consumers with lower cost," Renewable Fuels Association
CEO Bob Dinneen said on Monday in a statement.
The U.S. Renewable Fuel Standard, or RFS, requires U.S. refiners and importers blend ethanol into their fuels or purchase credits from companies that do.
The credits cost pennies apiece in 2013 but have spent most of the past three years above 50 cents. The mostly widely traded credit was priced at 75 cents on Monday, traders said.
The higher cost will drive some of the region's five oil refineries out of business, speakers said, noting recent hurricanes underscored the importance of Philadelphia-area plants to the nation.
"Take the refineries on the East Coast off the grid, and we're all reliant on Texas to keep American energy secure," said U.S. Republican Representative Patrick Meehan, whose district includes the Delta refinery.
The credits fell to a year-to-date low of 34 cents in March amid optimism that Trump would revamp RFS and shift some costs to retailers and others, but it now appears he will not make that change.
The U.S. Environmental Protection Agency has angered the biofuels industry by calling for less biofuel blending. It also wants to allow exported ethanol to earn credits, increasing the pool of credits and driving down prices.
"This is manufacturing," Meehan said of the refineries threaten by higher costs. "You don't have to bring it back. It's here today. We just have to keep it."
Reporting by Jarrett Renshaw