Merchant refiners in the United States have amassed up to a $1.6 billion shortfall in the credits they will need to comply with US biofuel laws, according to a Reuters review of corporate disclosures, an apparent bet that the Biden administration could let them off the hook or that credit prices will fall.
The big liability among companies including PBF Energy Inc, CVR Energy Inc, Par Pacific Holdings and Delta Airlines comes as the administration of President Joe Biden considers granting oil refiners relief from their biofuel mandates amid soaring credit costs and economic turmoil from the coronavirus pandemic that has hurt the fuel industry.
"There is a sense among refiners that they have to do something right now," said Robert Campbell, head of oil products research at Energy Aspects, referring to the decision among some companies to carry a shortfall in the biofuel credits. "They feel that the point of obligation is extremely challenging for them."
Under the US Renewable Fuel Standard programme, refiners must blend billions of gallons of biofuels like ethanol into their fuel or buy compliance credits, known as RINs, from those that do.
Merchant refiners have long opposed the policy because of its cost.
PBF posted outstanding biofuel and emissions credit obligations for the first quarter of 2021 amounting to $848.3 million, up from $118.4 million for the same quarter a year ago, according to the Reuters review.
The company did not say how much of the $848.3 million was related to outstanding compliance obligations.
CVR, owned by billionaire investor Carl Icahn, meanwhile posted a biofuel credit liability of $342 million, up from $6.0 million a year earlier, according to the review.
Par Pacific's biofuel credit liability at the end of March was $126 million, according to the company's first-quarter earnings call.
US refiners amass over $1.0b biofuel liability
FE Team | Published: June 18, 2021 21:34:28
US refiners amass over $1.0b biofuel liability
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