Biofuel mandates are just government picking winners and losers rather than the marketplace

Fuel Fix:

Sen. Ted Cruz, in a speech to refinery workers here Wednesday, said federal ethanol rules were making "Wall Street speculators and giant integrated companies" a "windfall" while small refineries struggle.

"The speculators can go speculate somewhere else," Cruz said. "This is about jobs, good jobs that provide for your families. They are at risk from a broken regulatory system that needs to be fixed."

The Texas senator's visit to Philadelphia comes as Washington remains divided on whether to reform an ethanol mandate that analysts say has benefited some large oil companies and biofuel producers but has hurt smaller refineries.

The refinery Cruz visited Wednesday is owned by Philadelphia Energy Solutions, which has filed for chapter 11 bankruptcy protection, blaming the federal mandate that requires ethanol be blended into the nation's fuel supply for driving up their costs.

Many refiners, such as the one in Philadelphia, don't blend ethanol into the gasoline. Under federal rules, they must buy blending credits instead, but cost of these credits have jumped in recent yesr

The Philadelphia Energy Solutions refinery is the largest on the East Coast. In a tent set up on the grounds, Cruz spoke to hundreds of workers still dressed in coveralls.

"If you stand with the working men and women then stand up and fix this broken RIN system," Cruz said, referring to the biofuels credits many refineries buy instead of blending ethanol into their gasoline.

Greg Gatta, the CEO of the refining company, urged government action on what he was not "just another issue" in Washington but about a "region's livelihood."

Since a meeting with President Donald Trump last year, Cruz has been tried to negotiate a deal with Midwestern senators to reduce the cost of biofuel credits.

So far there has been little discernible sign that a compromise is near, even as Sen. John Cornyn, R-Texas, the Senate majority whip, and EPA Administrator Scott Pruitt urge action. Cruz has proposed capping the price of biofuel credits, something Sen. Chuck Grassley, R-Iowa, said he could not support because it would damage the ethanol industry.

But Cruz said Wednesday, "we are making real progress to a win, win solution."
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If the ethanol industry needs to mandate that refiners buy credits for something that is no value to them or their customers, it does not deserve to survive.  It makes about as much sense as demanding any other industry buy something of no value to them.  It is like a mob shakedown of business. 

The ethanol industry has outlived whatever limited usefulness it has had.  It was born out of a sense of scarcity of fossil fuels that is no longer the case.  A win-win for consumers would be no mandate at all.  If ethanol is seen as something that is actually needed it would not require a mandate.

Consumers and taxpayers should be the concern of Congress, not rent-seeking big business.