Discover and read the best of Twitter Threads about #RFSwars
Most recents (16)
1. #RFSwars just keep getting weirder and weirder. Guess that fits with the times. @OPISBiofuels reporting "EPA Revokes 31 SREs for 2018 RFS Compliance Year, Denies Five More" This sounds like a real blow for the crude oil refiners until you read the fine print.
@OPISBiofuels 2. "Concurrent with today’s denial action, EPA is also taking action to provide an alternate compliance approach that allows 31 small refineries to meet their new 2018 compliance obligations without purchasing or redeeming additional RFS credits."
@OPISBiofuels 3. I am struggling to fathom what just happened with this RFS ruling. So let me get this right. #1 past SREs invalidated. #2 Firms with invalid SREs are out of compliance for those years. #3 Said firms do not have to turn in RINs to demonstrate compliance. Huh?
1. Seeing more and more calls to waive RFS mandates as a way to address food supply problems. Turns out we already conducted a huge experiment to see how this would work out. It was called small refinery exemptions (SREs). Collectively, the SREs functioned as an RFS waiver.
2. The main target of the calls to waive RFS mandates is ethanol. New front in the #RFSwars. I only need one chart to prove that waiving RFS conventional ethanol mandate will not reduce ethanol use more than a minimal amount.
3. Here is the chart. Monthly implied blend rate for ethanol in US gasoline. SREs waived billions of gallons of ethanol mandate between 2017-2020, but notice literally no change in the trajectory of the ethanol blend rate. Hmmm. 
1. Further confirmation that the leaked RVO numbers last week were real. This is quite a statement even considering how ferocious past battles in the #RFSwars have been.
2. Assuming the leaked numbers were right (at least at the time), I am still trying to figure out the political calculus of Biden Admin in going so anti-ag on the RVOs. Whatever your personal views on the RFS, the leaked proposal is indeed the worst ever from perspective of ag
3. Think about that. By all appearances, the Biden Admin is attacking the RFS more aggressively than even the Trump Admin. Who had that on their bingo card? I certainly did not.
1. Given strong evidence now that leaked RVO numbers were legit, we can now consider further how the Biden EPA is going to justify the cuts.
2. I have talked a lot about the "intentionally late gambit" for crushing the RVOs, particularly for the conventional ethanol mandate. Biden EPA could clearly use this for cutting 2020 RVO by arguing compliance is late. Probably do so for 2021. But 2022?
3. Since the leaked RVOs included substantial cuts to the conventional mandate for all three years for 2021-2022, I no longer think this is the justification being used to crush the RVOs for all three years. Instead, they went were even the Trump EPA dared not tread.
1. And I thought I would have a normal day today! Going to focus on the implications of the SRE denial decision in this thread. Lots of unknowns about the E15 pump announcement. So sticking with what is known.
2. The implications of the SRE denial is far-reaching with regard to PAST and FUTURE implementation of the RFS mandates. Without the gap SREs, nationwide application of the 10th circuit decision means that very few of the SREs issued since 2011 or 2012 are valid. Poof.
3. I recall some in the oil refining business saying I was out to lunch that the 10th Circuit decision could blow up the SRE program. Done blowed up now! But honestly this was inevitable.
1. Unless SCOTUS reverses the 10th Circuit ruling that started all this, the SRE policy in play by the EPA since 2017 is effectively dead. This is now an official rulemaking of the EPA, not a media rumor. In the end, Trump sided with his great patriotic Iowa farmers on this one
2. The #RFSwars will go on, but this cannot be spun any way but a major political defeat for the oil refining interests as a whole. Now will Trump come threw with cash compensation for small refiners? My guess is the answer is yes.
3. Assume small refiners get some kind of cash compensation instead of SREs. Everyone should be happy right? Wrong. The real purpose of the SRE program post-2016 was never to provide relieve for small refiners. It was to drive the ethanol mandate below the E10 blend wall.
1. Reuters is reporting this morning that DJT has instructed the EPA to deny retroactive SRE waivers due "to concerns the issue could cut into his support in the Farm Belt, three sources familiar with the decision said" Big development in the #RFSwars if confirmed
2. This decision jibes with the announcement earlier this week than merchant refiners are taking the SRE battle to SCOTUS. May have expected this and SCOTUS is the last resort.
3. Remember a couple of weeks ago when Biden came out against the #SREs and in support of the RFS? I thought that might be the only thing that could get DJT to betray his friends in the oil refining industry. DJT had to respond in some way and said so at the time.
1. We are now reaching new heights of political irony and absurdity in the #RFSwars. Correct me if I'm wrong, but didn't Joe Biden support Delta Airlines in their battle to exempt their Philly refinery from RIN compliance? reuters.com/article/us-oil…
2. I can't put my hands on it but I recall Biden saying something about RIN expenses killing merchant refiners. Oh the irony. Now championing the other team!
3. Biden's policy shift could actually have a real impact in the RIN market. I expect Trump to now to feel extreme pressure to make some kind of SRE announcement in response. Stay tuned.
1. Weekend Reading: Just published an article in the AJAE with Kristin McCormack and Jim Stock at Harvard: "The Price of Biodiesel RINs and Economic Fundamentals." Issue includes a comment by Bruce Babcock and our rejoinder. Here is link to the issue onlinelibrary.wiley.com/toc/14678276/2…
2. Of course, I really like our article, but Bruce Babcock's commentary simply is not to be missed if you are interested in all the economic and policy controversies surrounding the #RFSwars. I wish this was not behind the paywall but not my call on that one.
3. We investigate in this article whether economic fundamentals explain D4 biodiesel RIN prices. Too many examples to count of accusations by both sides in the #RFSwars that RIN prices are manipulated, especially by those evil speculators.
1. Now back to the #RFSwars. The Trump Admin is clearly going to be looking for a way to address refiner concerns after the #SRE program was just flushed down the toilet They might want to take a look at a proposal I made last Sep farmdocdaily.illinois.edu/2019/09/cleari…
2. Probably would take Congressional action, but I still think a reasonable way to go is to issue a blanket waiver for all small refineries at the time of final RVO rulemakings. Addresses the stated concerns of all small refiners in one fell swoop.
3. Key is that blanket waiver has to be made at the time of final RVO rulemaking so the obligation of small refiners is reallocated to the larger refiners. For now, forget the second part of my proposal of reallocating past SREs. Just focus on a blanket waiver going forward.
1. Looks like Trump Admin did not appeal Tenth Circuit SRE ruling. Unless the last second hail Mary legal move by a refiner to seek an "en banc" hearing succeeds, then the Pruitt-SRE program is effectively dead.
2. Key thing to consider is that Federal courts have now twice confirmed that the North Star of the RFS really is the North Star. That is, the RFS is a MARKET FORCING LAW intended to increase the use of biofuels in transportation fuel supply of the US.
3. See the #FDD article last week for a discussion of the North Star of Congressional intent when they passed the RFS. farmdocdaily.illinois.edu/2020/03/epa-an… Love it or hate it, this is the law of the land.
1. High, high drama today in the #RFSwars. Clear that the RIN price cap proposal bombed a second time. But @OPISBiofuels reporting that D6 RINs dropped 20% this morning on Bloomberg report that Trump Admin will appeal the 10th circuit ruling regarding #SREs.
@OPISBiofuels 2. I found two things interesting in the @OPISBiofuels article. First, "Bloomberg reported that an intervention by Attorney General William Barr and "an intense pressure campaign" by Texas Republican Sen. Ted Cruz had EPA now set to appeal the ruling."
@OPISBiofuels 3. Second, the ferocious reaction of ag groups. "The president needs to understand that Ted Cruz doesn't care about this administration or families across the heartland who are counting on the White House to keep its promises."
1. Potentially big news on the #RFSwars. Bloomberg reporting that Trump Admin is going to apply 10th Circuit ruling on #SREs nationwide. bloomberg.com/news/articles/…
2. Political blowback from refining country will be severe. We will see if Trump Admin caves somehow. However, what alternative does the Trump EPA really have now? Legally, the ruling really boxed in the EPA. Pretty hard not to apply the ruling nationwide.
3. So, now let the wailing and gnashing of teeth about RIN costs begin once again. Oh my. Small refineries are going to go our of business right and left as a result. Wrong.
1. So just how bad were ethanol losses in 2019? My personal take---losses were real but maybe not as bad as many think.
2. My estimated annual profits for a representative Iowa ethanol plant over 2007-2019. I updated my model this year to recognize efficiency gains in ethanol and DDGS conversion since 2015. So profits are higher since 2015 than what I published previously.
3. 6 straight years of annual profits over 2013-2018. So the loss in 2019 was a bummer. My estimate is an average plant lost $1.6 million in 19. Still, trendline for profits in last three years is troubling. Small profit or loss.
1. Just finished reading the EPA Supplemental proposal for 2020 RVOs. I have to give credit where credit is due to the influence of the oil refiners over at the EPA. After reading this over, I am officially declaring the #Grassley rule as dead.
2. The cleverness of those oil refinery lobbyists and lawyers is truly impressive. So, now we get the supplemental rule with the much ballyhooed moving average reallocation. Straightforward right? Wrong Buddy Ruff.
3. To understand the clever way that the refiners limited their losses in this front of the #RFSwars, it helps to start with what I would call the common sense interpretation of the history of EPA SRE waivers. Column (4) shows the SRE exempted gasoline and diesel vol over 16-18
1. Back to our regularly scheduled programming. A very nice article from @toddneeleyDTN on the lead up to the release of the EPAs 2019 proposed rulemaking. Much to absorb about the process in this article: dtnpf.com/agriculture/we…
@toddneeleyDTN 2. Did some digging on my own this morning and found within the docket for 2019 rulemaking a version of the rulemaking dated June 21, 2018. The email it is attached to indicates this was the official working version of the proposal at that point.
@toddneeleyDTN 3. Here is the link to the June 21 version of the 2019 rulemaking file:///C:/Users/sirwin/Downloads/Email_from_Tia_Sutton_to_Chad_Whiteman_regarding_Updated_version_of_2019_RVO_NPRM.pdf
