American energy producers can drill and produce crude oil at record-setting rates without fueling a single car, truck, plane, or military vehicle because crude oil is merely raw material until refined. America will only be able to truly achieve energy dominance when we stop unnecessarily burdening domestic refiners with broken regulations and unnecessarily high costs.
To start, we must recognize that the Environmental Protection Agency’s proposed two-year expansion of the Renewable Fuel Standard, the federal biofuel mandate, directly raises the price of gasoline and threatens America’s oil refineries. If finalized as proposed, refiners’ RFS compliance costs would rise to record levels, putting fuel-manufacturing capacity at greater risk, with prices increasing at the pump.
As CEOs who operate three of the remaining four large refineries left on the East Coast, we understand the vital importance of America’s refining sector to economic prosperity and national security. Combined, we manufacture over 1.2 million barrels per day of homegrown transportation and home heating fuels to supply some of the nation’s largest cities and smallest towns.
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Every American business and consumer depends on domestic refiners for fuels and byproducts, as does our military. Through world wars, economic downturns, pandemics, and periods of prosperity, America’s refineries fueled our country.
These are among the reasons why President Donald Trump declared a national energy emergency on his first day back in office, stating that domestic refining is insufficient to meet the nation’s energy needs. He also designated the Northeast as an area where energy supply is most at risk due to costly regulations. We wholeheartedly agree.
Our nation has already lost too much refining capacity. Energy vulnerability along the East Coast is a national security threat hidden in plain sight. Over the last 15 years, the Northeast has lost over 874,000 barrels per day, or 60% of its refining capacity, as six refineries have shuttered.
The RFS imposes extreme regulatory compliance costs on refiners, despite many having virtually no role in ethanol blending. Yet, independent refiners have annual RFS-related costs often exceeding what they spend on salaries, benefits, maintenance, and utility expenses combined!
Independent analysts note RFS compliance costs have historically added 20 to 30 cents per gallon to prices at the pump. Additionally, the American Fuel & Petrochemical Manufacturers, a trade association, notes that the EPA’s proposal could be the most expensive ever, costing our nation approximately $70 billion annually.
Much of this $70 billion does not support improving the ethanol distribution and manufacturing infrastructure as originally envisioned by Congress.
While our companies have struggled with this pressure, other refiners have unfortunately succumbed to these crushing regulatory costs, with some declaring bankruptcy or closing, specifically citing the RFS as a major contributing factor.
Since 2019, the United States has lost more than 1.4 million barrels a day of refining capacity; as a result, our country has to rely more on imports. On the East Coast, where roughly 35% of Americans reside, there are only four major refineries from Maine to Florida.
Clearly, the EPA’s proposed RFS updates have created cause for alarm by once again proposing an unachievable ethanol requirement that far exceeds EIA demand projections. The proposal mandates ethanol volumes that are well beyond what is possible, volumes that are well in excess of the blendwall. Without reducing total gallons mandated, simply by limiting ethanol requirements to what is feasible and adding the decrease in ethanol to the advanced mandate, the administration could reduce the cost of the program by half, which would protect gasoline prices and remove the threat to our merchant refiners.
Previous experience suggests that, if finalized, this proposal will trigger astronomical RFS compliance costs, which could drive up gasoline prices and possibly lead to additional refinery closures. This would cause the loss of family-sustaining jobs and further erode America’s refining capacity, undermining the president’s goal of unleashing American energy and restoring our energy independence.
The RFS has been contentious since its inception. We recognize that any major updates pose a complex policy challenge with political consequences. However, policy leaders can modernize the decades-old program so that the growth of America’s biofuel industry continues without threatening the country’s independent refiners, fuel supply, and consumers.
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American energy producers, refiners, and agricultural communities all play indispensable roles and share the same goals: to meet our nation’s energy needs in an environmentally responsible way, while keeping energy prices affordable for American families and businesses. Commonsense reforms can protect independent refiners and consumers from higher costs while bolstering the ambitious biofuel programs that support America’s farming communities using reasonable solutions.
Now is the time for Washington, D.C., to reform and modernize the outdated, dysfunctional biofuel mandate before America loses another refinery.
Matthew C. Lucey serves as the CEO and president of PBF Energy Inc.
Jeff Warmann serves as the CEO and president of Monroe Energy.
