A Biofuels Bankruptcy

January 25, 2018

The East Coast’s biggest refinery filed for Chapter 11 bankruptcy protection on Sunday, and Philadelphia Energy Solutions puts the blame with the federal government’s biofuels policies. The refinery’s workers are justified in asking why the Trump Administration failed to spare them when it had the chance last fall.

For more than a decade, the Environmental Protection Agency has used compliance credits, which are created when fuel is blended, to enforce ethanol quotas. But independent refiners like Philadelphia Energy Solutions specialize in manufacturing fuel, not blending it, so the federal government requires them to buy credits to meet the mandate.

In 2017 meeting this regulatory burden cost Philadelphia Energy Solutions more than twice as much as payroll and about 1.5 times more than its average annual capital expenditures. Since 2012 the refinery has spent $832 million on credits. “The whole reason we’re filing for Chapter 11 is that this is a massive expense,” said CEO Gregory Gatta.

No sympathy from Bob Dinneen, chief executive of the Renewable Fuels Association. He said in a statement this week that...

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