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The EPA has managed to bankrupt one of the biggest refineries in the northeast
There’s a headline I bet you didn’t see coming, huh? We’re living in a time when the American energy sector is surging and becoming a dominant force not only domestically, but globally as well. There’s a president in the White House who is loosening up restrictions on drilling as we speak. Older pipeline projects are finally being finished and newer ones are kicking into gear. That includes Pennsylvania where, as we recently discussed, the Mariner East II Pipeline may soon be bringing even more product into the Philadelphia/New York region for processing and shipment.
So with all of those conditions in place, how in the world could the Philadelphia Energy Solutions LLC refinery, one of the biggest around, be filing for bankruptcy? That must be a mistake, right? But it’s not. (Bloomberg)
How did that happen with energy products being so plentiful? The easy answer is provided by the company which owns the refinery. It’s not one of the newest designs so they’re not equipped to process biofuels and blend them into gasoline. And because of our old friend the Renewable Fuel Standard, that means that the refinery has to purchase government mandated RIN credits (Renewable Identification Number) in order to legally operate.
In case you’re wondering how much those RIN credits cost these days on the bizarre market which has grown out of the government mandate, Philadelphia Energy Solutions had to spend $217M in 2017 for them. That was their second highest operating cost, adding up to more than any other expense besides crude oil to process, and more than twice their total salary for the workforce. At the same time, as I mentioned above, an abundant oil supply is something of a double edged sword. High supply and steady demand means lower prices, so the government was jacking up their costs massively just as profits were getting slimmer.
More at ...The EPA has managed to bankrupt one of the biggest refineries in the northeast - Hot Air
There’s a headline I bet you didn’t see coming, huh? We’re living in a time when the American energy sector is surging and becoming a dominant force not only domestically, but globally as well. There’s a president in the White House who is loosening up restrictions on drilling as we speak. Older pipeline projects are finally being finished and newer ones are kicking into gear. That includes Pennsylvania where, as we recently discussed, the Mariner East II Pipeline may soon be bringing even more product into the Philadelphia/New York region for processing and shipment.
So with all of those conditions in place, how in the world could the Philadelphia Energy Solutions LLC refinery, one of the biggest around, be filing for bankruptcy? That must be a mistake, right? But it’s not. (Bloomberg)
How did that happen with energy products being so plentiful? The easy answer is provided by the company which owns the refinery. It’s not one of the newest designs so they’re not equipped to process biofuels and blend them into gasoline. And because of our old friend the Renewable Fuel Standard, that means that the refinery has to purchase government mandated RIN credits (Renewable Identification Number) in order to legally operate.
In case you’re wondering how much those RIN credits cost these days on the bizarre market which has grown out of the government mandate, Philadelphia Energy Solutions had to spend $217M in 2017 for them. That was their second highest operating cost, adding up to more than any other expense besides crude oil to process, and more than twice their total salary for the workforce. At the same time, as I mentioned above, an abundant oil supply is something of a double edged sword. High supply and steady demand means lower prices, so the government was jacking up their costs massively just as profits were getting slimmer.
More at ...The EPA has managed to bankrupt one of the biggest refineries in the northeast - Hot Air
