This January, I authored a column defending President Trump and rural champions in Congress who had come under attack by refineries for their support of American-made biofuels. A Republican Pennsylvania state legislator, Rep. Bob Godshall, doubled down, attempting to pit refinery workers against rural jobs. It’s a false choice that threatens the livelihood of countless workers and farmers, including those in Pennsylvania.
At the heart of Rep. Godshall’s argument is an economic fiction served up by a few refineries seeking special treatment under America’s 12-year old Renewable Fuel Standard. They claim that American-made biofuels are putting refinery profits at risk, pointing to the bankruptcy this January of Philadelphia Energy Solutions (PES).
In reality, refiners are doing great. Companies like PBF, Valero, Marathon, and HollyFrontier are all posting surging profits. Carl Icahn’s CVR Energy posted a whopping 2,888 percent jump in profits per share last quarter, and they are subject to the same RFS requirements as everyone else. As the EPA reported under Scott Pruitt, RINs “do not cause significant harm to refiners” because any compliance costs are recovered “in the prices they receive for their refined products.” It’s an accounting gimmick designed to justify a federal handout.
Still, there are non-fictional problems at PES. Godshall should take a careful look at the investigation published by Reuters, which shows what really happened. A group of investors bought the plant with the help of $25 million from Pennsylvania taxpayers, then loaded PES up with debt while draining “at least $594 million in cash distributions from PES before it collapsed.”
Another analysis from the University of Pennsylvania shows that “PES also had to siphon over $616 million between 2012 and 2017 in the form of dividends, debt repayment, and advisory fees to equity investors,” including the Carlyle Group and Energy Transfer Partners (ETP). Meanwhile, ETP built a new pipeline system causing PES to be “largely shut out from the supply of cheap domestic crude,” according to U-Penn.
Rather than offer those investors a federal handout, policymakers should urge the refinery to invest in long-term growth and job security for Pennsylvania workers.
The regulatory changes they want would not only violate President Trump’s promise to rural families who delivered a massive Republican victory in 2016, they would threaten rural manufacturing jobs like those at Pennsylvania Grain Processing, a company that provides a vital market for 300 Pennsylvania farmers and 100 more in neighboring states. These jobs are truly important to hard-pressed families in rural areas like Pennsylvania’s Clearfield County, where unemployment remains at 6 percent. In contrast, more urban communities in the southeast of the state, like Delaware and Chester counties, are seeing unemployment under the national average of 4.1 percent.
In part, that’s because farm income has declined for the last four straight years under former President Barack Obama. Farmers are making less than they did 12 years ago, according to the U.S. Department of Agriculture. The RFS allows our farmers to compete at the fuel pump, creating a vital market for surplus crops, holding down fuel prices, and driving America’s dominance in the global biofuel market. Without the RFS, petroleum interests would go back to locking competition out of the market, raising fuel prices, and destroying an economic lifeline for rural families.
As I noted in January, the RFS makes crystal clear economic sense, and it remains vital to U.S. energy security. President Trump deserves credit for protecting U.S. energy investments and hard-working farmers against misinformation campaigns.
Former U.S. Sen. Rick Santorum, R-Pa., serves as co-chair of Americans for Energy Security and Innovation.
