Ethanol Blog

Refiner who Blamed RFS Costs for Chapter 11, Responds to Critics

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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An East Coast refiner that blamed $830 million in costs for biofuels credits in the Renewable Fuel Standard, as a reason for filing for Chapter 11 bankruptcy protection, is firing back at critics who pointed to reasons other than the RFS for the company's actions.

When Philadelphia Energy Solutions filed for Chapter 11, the Renewable Fuels Association and United States Sen. Charles Grassley, R-Iowa, countered by offering a number of other reasons why the company is reorganizing.

RFS compliance requires a renewable identification number (RIN), a 38-digit number attached to a gallon of biofuel. It is used to track production, use and trading. Many refiners pass the costs of buying RINs on to consumers in the price of fuel. Gasoline refiners and importers must comply with the RFS by buying and submitting credits to the EPA or face potentially heavy fines.

In a memorandum released by Grassley's office last week, the senator said publicly available evidence points to changes in PES' available feedstocks and other management decisions -- not RFS compliance costs -- as the primary reasons for the company's financial difficulties.

In a statement to DTN on Monday, PES and the United Steelworkers International said the RFA had made "mischaracterizations" about the refiner's operations.

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Read what the RFA said about the PES Chapter 11 here: http://bit.ly/…

PES Chief Executive Officer Gregory G. Gatta and United Steelworkers International President Leo W. Gerard today issued the following statement, "Philadelphia Energy Solutions and the United Steelworkers are appalled that the Renewable Fuels Association has launched a dishonest campaign, fabricating 'facts' about PES's business and mocking the livelihoods of thousands of manufacturing workers in refineries across America.

"The facts are this: PES is a solid business providing energy security for America and employment for 1,100 dedicated refinery workers who every day help power homes, businesses and transportation throughout the Northeast United States.

"We believe strongly that energy diversity in source and supply is critical to American energy security, reliability and affordability, and it sustains thousands of American workers and their families. Unfortunately, the RFA has attacked the hard-working men and women of the refinery industry, comparing them unfavorably with farmers whom the RFA 'would pick...any day of the week.' We don't believe in choosing winners and losers. There is a solution that allows all of us to thrive. Unlike the RFA's denigration of the value of American refinery workers, we are not fighting against ethanol or other biofuel producers, farmers and the many Americans they employ.

"In fact, PES consistently blends as much ethanol and other biofuels as its customers will allow. We simply want to correct the flawed and indefensible RINs compliance mechanism that is destroying the independent merchant refining industry and the thousands of families sustained by it. PES and the USW believe we can all participate in the energy market on an even playing field.

PES posted a fact sheet to its website on Monday: http://bit.ly/…

Read about the Grassley memo here: http://bit.ly/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow me on Twitter @toddneeleyDTN

(TN)

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