Renewable Fuel Standards cause refinery bankruptcy?
Philadelphia Energy Solutions, owner of the largest U.S. East Coast refinery, said on Monday its plan to get out of bankruptcy hinges on whether it can shed existing biofuel costs under the country’s renewable fuel laws.These standards should be dropped. They are completely unnecessary. They are the product of perceived scarcity of fossil fuels that no longer is valid. All their achieve now is enrich certain agribusinesses at the expense of refiners and motorists. They add no value to the fuel or the environment.
The plan revives a debate between U.S. refiners and ethanol producers over renewables policy, and could spur actions from other struggling refiners should the U.S. Environmental Protection Administration allow PES to reduce its biofuel obligations.
The Trump Administration could also wade deeper into the fray should the Pennsylvania refinery, which has some 1,100 workers, face closure.
PES told its employees on Sunday it would file for Chapter 11 bankruptcy, pinning its financial difficulties on renewable fuel laws, Reuters reported. In its bankruptcy filing on Monday, the company said it does not have enough cash to comply with the laws for 2016 and 2017.
But PES has also seen its debt grow after its backers took out a $550 million loan used for dividend-style payouts.
PES said its biofuels obligation for 2016 and 2017 totals about $185 million. The company also plans to sell $150 million worth of credits to help emerge from bankruptcy.