American Fuel & Petrochemical Manufacturers CEO Chet Thompson today issued the following statement on the Biden administration’s announcement that it plans to invoke emergency waiver authority under the Clean Air Act to allow for the incremental sale of E15 fuel this summer.
AFPM President and CEO Chet Thompson and API President and CEO Mike Sommers sent a letter to President Biden responding to recent letters the Administration sent to major U.S. fuel refiners suggesting that these companies, their workforces and facilities throughout the country aren’t doing their part to bring fuel to the market and lower energy costs for consumers.
Fuel supply restrictions resulting from hurricanes and other natural disasters, often lead to price increases as the market reacts to rebalance supply and demand. To protect consumers, many states have enacted price gouging laws that limit a merchant’s ability to raise prices during an emergency.
As Hurricane Florence approached the East Coast this week, nearly two million residents throughout the Carolinas, Maryland and Virginia were placed under evacuation watch.
When Congress created the Renewable Fuel Standard, the intent was clear. The RFS was supposed to build a market for American-grown biofuels and support domestic energy security. Today, EPA wants to deviate wildly from this course. Instead of maintaining the RFS as a program for liquid transportation biofuels, EPA’s RFS proposal for 2023 to 2025 would begin transforming the RFS into yet another huge government subsidy for electric vehicles.
The cost of Renewable Fuel Standard (RFS) compliance credits, specifically D6 renewable identification numbers (RINs), is out of control. Sales of D6 RINs for conventional ethanol recently registered above $1.90 (the highest trades in history).
The California Air Resources Board (CARB) adopted its Advanced Clean Cars II (ACCII) regulation. ACCII requires 35% of light-duty vehicle sales to qualify as “zero emission” by 2026 and 100% by 2035. Essentially, this amounts to a ban on new sales of traditional gasoline and diesel-powered cars and trucks. To implement the policy, California will need a Clean Air Act waiver from the Environmental Protection Agency (EPA). If EPA grants the waiver, millions of Americans—including many outside of California—could lose the option to buy the car or truck THEY want.
Earnings in commodities-based industries tend to be cyclical. Because of the up-and-down reality of refining, it would be a mistake to regulate or legislate based on the high points. A few quarters of earnings don’t provide an accurate representation. That context is important for answering the question of what happens with refinery profits and whether using earnings to “buy back” stock from shareholders is an appropriate use of those funds.
Publicly owned companies, like many U.S. refineries, have a fiduciary responsibility (which is a legal obligation) to act in the best interest of their shareholders, and that extends to how companies spend their earnings. Often, earnings are spent on a combination of the following: direct dividends, stock buy back programs, paying down debt and capital investment projects.