Americans pay more for gas than they should. One reason is that politicians and environmentalists have made it more expensive to build refineries, while special interests make it more expensive to keep the refineries we have through euphemisms like the Renewable Fuel Standard (RFS).
The RFS is broken and imposes unfair costs on American refiners, mandating corn ethanol be blended into our gas. Refineries have to pay for ethanol, and the cost is passed on to consumers. Because of the RFS, Big Corn harvests $100 million daily from Americans, whether we eat corn or not.
Look no further than California to see the consequences: mass layoffs and soaring gas prices. The RFS mandate undermines efforts to strengthen America’s energy independence by sending refining capacity overseas and making energy less affordable.
The RFS incentivizes oil companies to game the system and outsource jobs overseas. It’s not surprising that Big Oil companies with international reach and the ability to avoid it are offshoring their refining (and refining jobs) to avoid the RFS mandate, making it highly counterproductive in practice.
Oil conglomerates can buy crude in one country, refine it overseas, and sell finished products in the United States, thereby avoiding the compliance costs imposed by the RFS.
For example, British energy titan Shell operates refineries in South Africa, Canada, China, Malaysia, Germany, the Netherlands, the United Kingdom and Qatar. This global presence enables offshoring with which independent American refiners cannot compete. Small refineries that don’t offshore their refining must offset massive compliance costs somewhere else, or close altogether.
Valero, a multinational energy corporation with 15 refineries across the United States, Canada and the United Kingdom, has flexibility in sourcing crude, refining products and distributing fuel. It used to lobby against the RFS. Now, it uses its global footprint as a loophole to avoid the otherwise crippling RFS regulations.
Valero’s Pembroke refinery in the United Kingdom processes 270,000 barrels per day to produce gasoline, diesel, jet fuel and other refined products. A significant portion is sold to Americans, bypassing the RFS mandate and the costs that small, independent American refineries can’t avoid. It’s just not fair.
This is an example of how the RFS is pushing independent operators out of the market. These crushing compliance costs have contributed to bankruptcies, job losses and consolidation within the industry.
The RFS is burdensome and unrealistic. The implications of this broken law are even greater for small-business owners who cannot afford to ship their products overseas.
U.S. laws shouldn’t give multinational refiners a massive advantage over independent American refiners while making our gas more expensive. They shouldn’t eliminate refineries and kill manufacturing jobs. However, that’s what the RFS does.
Elected officials should help the companies that keep manufacturing and jobs on American soil. The officials should close loopholes that incentivize offshoring. An American law should not hurt Americans and American refiners while helping foreign oil companies. It is time for Congress to reform the RFS to lower gas prices and protect American jobs.
Robert Romano is the president of Americans for Limited Government.
This article originally appeared on The Detroit News: Renewable Fuel Standard drives up gas prices, outsources jobs | Opinion
Reporting by Robert Romano / The Detroit News
USA TODAY Network via Reuters Connect
