Gordon Tomb, Real Clear Energy, explains the regulatory issues that may push east coast refineries out of existence…
“Among the worries is Pennsylvania Gov. Tom Wolf’s proposal to institute a tax on electricity generators that use fossil fuels through the Regional Greenhouse Gas Initiative (RGGI). This taxation scheme is intended to replace fuels like coal and natural gas with more expensive wind and solar energy.
In comments to regulators, Monroe Energy noted its extensive use of electricity and cited data showing that the cost of power was 38 percent less outside existing RGGI states. The company has spent hundreds of millions on environmentally beneficial investments with plans for more. “However, Monroe added, “we fear that enacting a program like RGGI will increase costs to such an extent that we may be unable to move forward with some of these projects.””
And, let’s not forget RINS:
”An even more immediate issue for Monroe is the federal government’s 16-year-old Renewable Fuel Standard (RFS), which requires refiners to add ethanol to transportation fuels or buy credits. The RFS has expanded since its inception creating a burden that threatens to put Monroe out of business if not addressed.
Ethanol is added to fuel as it is distributed to end users — or shortly before — to protect the equipment of refiners and transporters from the additive’s corrosive effect. Because Monroe does not sell to end users, it has virtually no ability to add ethanol and has to buy credits, whose price has risen from a few cents to nearly two dollars.
“The difference between credit prices of 2 cents and 2 dollars for us is hundreds of millions of dollars in compliance-obligation costs,” says Mr. McGlaughlin. Since buying Trainer in 2012, Monroe has spent more than $800 million on RFS compliance — multiples more than the refinery’s purchase price.”