Convenience Store News

March 6, 2017

By Lance Klatt

There has been a lot of news coverage recently about changing the point of obligation associated with the Renewable Fuel Standard (RFS). Some seek to shift the responsibility of adding biofuels into the fuel mix downstream to fuel marketers, rather than those who produce or import gasoline.

As operators of locally owned fueling stations, we wish to clarify that this change would harm fuel marketers, retailers and our customers. In fact, hundreds of single-store owners spearheaded the adoption of the first blender pumps, which allow individual stations to offer options like gasoline blended with 15 percent ethanol (E15) and E85. In the Twin Cities alone, there are 34 locally owned Minnoco gas stations selling E15 and other higher blends of ethanol, with more on the way. The number of Minnesota gas stations selling E15 gasoline doubled in 2016.

Chains like Kum & Go, Murphy USA and Sheetz have caught on, too. Today, retailers can blend their own ethanol or buy ethanol blends at a deep discount from distributors and pass the savings on to consumers. This business model makes single stores more competitive, while reducing costs for our customers. Not only is ethanol more affordable, but it also boosts the octane content of fuel, giving our consumers more appealing options for their vehicles.

Retail outlets owned or under contract with a few oil industry giants aren't always allowed to sell new blends like E15, which is becoming commonplace at more and more fueling sites. This corporate resistance to renewable energy actually benefits small retailers who can offer customers a cleaner, better-performing and more affordable option at the pump.

On the other hand, requiring fuel marketers to meet the Renewable Fuel Standard compliance would open hundreds of fuel retailers to potential new Environmental Protection Agency (EPA) compliance requirements. The change would threaten investments made under the current RFS and force the EPA to fundamentally restructure the fuels market, creating turmoil for retailers, producers, distributors, and consumers.

Further, as the end-user of the fuel, fuel retailers are not able to determine the composition of the fuel provided by refiners. As a result, changing the RFS would not only deprive retailers of valuable sales opportunities, but it could also impose dramatically higher costs on consumers or even result in the withdrawal of options from the marketplace.

That is why more than 35 organizations — including the National Association of Truckstop Operators (NATSO), NACS, the Association for Convenience & Fuel Retailing; and the Society of Independent Gasoline Marketers of America (SIGMA) — have all voiced opposition to changes in the RFS.

In exchange for yielding to demands from refining moguls like Carl Icahn, who would profit from a change in the point of obligation, RFS critics have reportedly even offered to endorse a long-sought waiver from the EPA's outdated Reid Vapor Pressure (RVP) limits, which complicate sales of E15 during the summer driving season. That's a commonsense change, with bipartisan support, but it would lose any value to retailers if the incentive to offer blends containing homegrown biofuels were to evaporate.

Of course, there are other reasons to support ethanol. Corn-based ethanol is an earth-friendly biofuel that reduces carbon emissions by an average of 43 percent, according to the U.S. Department of Agriculture. And with advanced biofuels, like cellulosic ethanol, carbon savings can rise to 100 percent or more, according to experts at the Department of Energy's Argonne National Laboratory.

Ethanol production also supports nearly 400,000 U.S. jobs, including many in states like Minnesota, which is home to 20 ethanol plants and one biobutanol plant, with a combined ethanol production capacity of more than 1 billion gallons.

No one benefits when a few massive entities can monopolize our fueling options. Biofuels provide a clean, homegrown alternative that protects consumers — and by extension, fuel retailers — from spikes in oil prices. We shouldn't let a few special interests stand in the way.

Rewriting the RFS now to benefit the refining sector would create a logistical nightmare for fuel retailers, raise costs, and threaten the future deployment of clean, American energy.

Read the original story: COMMENTARY: Small Retailers Against Changing RFS Point of Obligation

Politico

March 8, 2017

By Eric Wolff

A consumer advocacy group is filing a complaint to Congress on Wednesday accusing President Donald Trump's friend and fellow billionaire Carl Icahn of violating lobbying rules by pushing the White House to change the federal ethanol regulations.

Public Citizen contends that Icahn, his company Icahn Enterprises and the CVR oil refining company he owns failed to register as lobbyists, yet pushed the White House to change the EPA's decade-old rules on ethanol — a move that would save Icahn's company hundreds of millions of dollars.

Trump named Icahn, whose net worth is pegged by Forbes at nearly $22 billion, as the White House's special adviser for regulatory reform in December, but said he would "not be serving as a federal employee or a special government employee and will not have any specific duties."

Icahn has aggressively advocated for the change in the ethanol rules under the EPA's Renewable Fuel Standard since last year, and according to the Public Citizen complaint, he submitted a proposal to the White House on Feb. 27 to overhaul the program and shift the burden for complying with the ethanol rules to fuel wholesalers. The RFS, which was created by Congress, gives EPA authority to operate the nation's biofuels program.

The letter to the secretary of the Senate and the clerk of the House calls for an investigation into whether Icahn and CVR's activities constitute lobbying of the White House for changes to the program. The complaint also cites Icahn's work in helping select EPA Administrator Scott Pruitt, and the proposed language he and fellow oil refiner Valero Energy submitted to the White House for a memo that would direct EPA to make the change.

"All of this has occurred with no record of any [Lobbying Disclosure Act] filings by or on behalf of Mr. Icahn, Icahn Enterprises or CVR Energy," the complaint reads. "It is unlikely that all these activities occurred without some individual or entity being obligated to report lobbying activity under the LDA."

The letter is latest controversy around the ethical complications that Trump, the wealthy members of his Cabinet and his advisers have faced because of their myriad business holdings.

Read the entire filed letter here.

Read the original story: Trump Adviser Icahn Accused of Breaching Lobbying Rules

Star Tribune

March 4, 2017

By Mike Hughlett

The U.S. ethanol industry set a production record last year. Exports boomed. And after a tough first six months, profits picked up in the last half of 2016, including in Minnesota.

While there are positive indicators for 2017 — corn prices are forecast to be stable and the federal mandate for ethanol production has been increased — the industry faces some significant uncertainties. Players in Minnesota, the fourth-largest producer of ethanol in the U.S., said there could be some export challenges.

Perhaps the biggest is President Donald Trump, who has strong ties to the oil industry, often ethanol’s nemesis pushing against higher ethanol production.

Trump has told ethanol producers he backs biofuel, but “it’s impossible to predict what he is going to do,” said Bruce Babcock, professor of energy economics at Iowa State University. “This is a complete wild card.”

Just this past week, discord among large ethanol companies erupted after Trump adviser Carl Icahn, who controls one of the largest independent U.S. refiners, made a deal with the president of the Renewable Fuels Association to recommend a change in policy that could directly benefit his company.

The industry is tied to the federal government through the renewable fuel standard, which was created in 2005 by Congress and reinforced two years later. It requires that biofuels be blended into gasoline.

The U.S. Environmental Protection Agency (EPA) administers the renewable fuel program. In November, former President Barack Obama’s EPA mandated a record amount of ethanol production for 2017: 19.28 billion gallons. Of that, 15 billion gallons — the statutory maximum — would come from conventional biofuels, primarily ethanol.

It marked the first time the EPA had mandated the full 15 billion gallons for conventional ethanol. With a precedent set, “it will be hard to go back on that,” Babcock said.

The increased mandate came at the end of a year that was an improvement for the ethanol industry over 2015, though no match for the boom of 2014. The United States, by far the world’s largest ethanol producer, pumped out 15.3 billion gallons of the stuff in 2016, up 3.4 percent over a year ago.

Minnesota in 2016 contributed 1.18 billion gallons, a bit below the all-time high of 1.2 billion gallons the previous year, according to the Minnesota BioFuels Association. The decline stemmed from a shutdown of one ethanol plant during 2016, the association says.

Minnesota producers actually saw operating income fall in 2016 over 2015, the association said. Like elsewhere, higher corn prices and low oil prices that began in 2015 squeezed ethanol producers’ profitability in the first half of last year. But corn costs declined in 2016’s second half, and exports — needed for producers’ bottom lines — rallied.

“Margins were pretty low, but as the year progressed we finished strong,” said Randall Doyal, CEO of Al-Corn Clean Fuel, a farmer-owned ethanol producer in the southern Minnesota town of Claremont.

Underscoring its confidence in ethanol, Al-Corn just started site work on a big expansion, raising its capacity from 50 million gallons annually to 120 million, which would make it one of the largest ethanol plants in the state.

“As the industry grows, those plants that enjoy economies of scale are the most valuable for their owners,” Doyal said. He’s looking for a continuation of last year’s trends for 2017, though January was a weak month for the industry. “It will be a decent year,” he said, “though I wouldn’t predict a barn burner.”

Minnesota has 20 ethanol plants, from farmer-owned co-ops to outposts of publicly traded companies. The industry directly employs 2,264 and supports an additional 2,589 direct farm and farm-related jobs, according a recent study for the state’s biofuel association.

Plus, Minnetonka-based agribusiness giant Cargill has three large ethanol plants, one in Nebraska and two in Iowa. And Inver Grove Heights-based CHS, the nation’s largest agricultural cooperative, owns two ethanol plants in Illinois.

With motor fuel prices relatively low, Americans drove a record amount of miles in 2016 and gasoline consumption also hit a record, according to federal agencies. Ethanol demand rose with gasoline, as motor fuel usually contains 10 percent of the biofuel.

One positive factor is the growth of E-15, a blend of 15 percent ethanol and 85 percent gasoline that can be used in vehicles made from 2001 on. It’s usually about 10 cents cheaper than E-10, the common ethanol blend.

E-15 sales in Minnesota have risen from 258,000 gallons in 2014 to 5.7 million gallons last year, according to the Minnesota Department of Commerce. There are 68 gas stations now selling the blend. “E-15 is becoming more popular in the metro area,” said Brian Kletscher, CEO of Highwater Ethanol in Lamberton and chairman of the state’s biofuels association.

The widespread adoption of E-15, though, is still bogged down by disputes with automakers and restrictions from the EPA. The Renewable Fuel Association’s deal with Icahn, reported by Bloomberg, removes some of those restrictions in return for not opposing a rule change, which could come through a White House executive order, to remove some of the fuel blending regulations that added costs to Icahn’s refinery business. The rule change, however, could add cost pressures to other players in the ethanol industry.

Sioux Falls-based Poet LLC — the largest U.S. ethanol producer with four Minnesota plants and a founder of Growth Energy, a separate trade group vehemently opposed to the Icahn move — called the agreement “a backroom deal” made while “leading voices” were absent. White House officials deliberated with all the players last week to try to reach a compromise, people familiar with the talks told Bloomberg.

However the EPA regulations change, if at all, the renewable fuel standard law essentially puts a ceiling on domestic ethanol production. So the main prospect for ethanol’s growth will continue to be exports.

“Exports are the lifeblood of profits for the industry,” said Scott Irwin, an agricultural economics professor at the University of Illinois. “The real frosting on the cake for ethanol producers last year was the red-hot export market.”

At 1.05 billion gallons, 2016 ethanol exports were second only to 2011, according to the Renewable Fuels Association.

Brazil and Canada are the prime destinations for U.S. ethanol, together accounting for half of the industry’s exports. China has become U.S. ethanol’s third biggest export market over the past few years, with a 17 percent share. China is also the largest U.S. export market for distillers grains, an ethanol byproduct used for animal feed.

But China has indicated that it plans to significantly raise tariffs on ethanol and distillers grains, a potential blow to exports.

“There are definitely storm clouds on the trade side,” Irwin said, heightened by the uncertainty over Trump’s positions and last week’s controversy.

While skepticism exists, several executives emphasize that the president has reiterated his support for the federal ethanol mandate as recently as two weeks ago.

“He is very supportive of domestic renewable energy,” said Poet CEO Jeff Broin. “He will stand behind rural America and the voters who put him into office.”

Read the original story: Trump Administration a Wild Card for Ethanol Industry

Bloomberg

Feb 28, 2017

By Jennifer A Dlouhy, Ari Natter and Bill Alison

Carl Icahn's stake in a Texas refiner grew by as much as $126 million Tuesday after the billionaire investor and special adviser to President Donald Trump helped broker a proposal to alter U.S. biofuels policy.

Icahn Enterprises LP holds an 82 percent stake in refiner CVR Energy Inc., which gained as much as 7.7 percent on news of a proposed deal to change the way the renewable-fuels program operates.

"This is the purest definition of a conflict of interest that you can get," said Tyson Slocum, a director at Washington-based watchdog Public Citizen. "It is clear that Icahn has played a role in influecing aspects of administration policy that have a direct financial impact on Icahn's business at CVR."

A spokeswoman for Icahn, Susan Gordon, didn't respond to telephone and email requests for comment. CVR Energy Cheif Executive Jack Lipinski decline to comment.

While federal ethics rules prohibit government employees from profiting from their government service, those rules may not apply to Icahn, who isn't paid for his service to the White House. Trump's transition team said in December that Icahn would advise the president in his "individual capacity" and wouldn't be a federal employee or a special government employee.

"He is simply a private citizen whose opinion the president respects and whom the president speaks with from time to time," said Stefan Passantino, deputy councel to the president for compliance and ethics. "Mr. Icahn does not have a position with the administration nor a policymaking role."

Icahn, the Renewable Fuels Association, Valero Energy Corp., and other entities hammered out a proposal on how they would overhaul the administration of the biofuel mandate and recently presented a memo to the While House outlining their compromise. That document included draft language for a presidential directive from Trump compelling the Environmental Protection Agency to make the administrative changes.

It was unclear whether the accord would gain traction in the Trump administration. White House spokeswoman Kelly Love said there was no executive order in the works dealing with ethanol.

Asked about criticism of Icahn's role in renewable fuel policy, Deputy Press Secretary Lindsay Walters said, "I can't speak to the particular issue in that article, but the only criteria the president uses to make policy decisions is what is the best interests of the American people."

Under the accord, the adminsitration, if it agrees, would begin changing who must comply with the Renewable Fuel Standard. Under the current structure, the onus falls on refiners and importers. Reginers that have relatively little or no blending infrastructure - like Icahn's CVR Energy and Valero Energy - must instead buy compliance credits known as "renewable indentification numbers" to make up the shortfall. They have been pressing the EPA to move the point of obligation from refiners to blenders. 

Identification Numbers

CVR said in a regulatory filing it spent more than $200 million on renewable identification numbers last year. The price of those credits plunged on the news and have been falling since Trump's election. At one point Tuesday morning, Icahn's stake in CVR and one of its subsidiaries increased by about $126 million, according to a Bloomberg analysis of mark data. Some of the gains were erased by the time CVR closed up 77 cents, or 3.5 percent, at $22.92 in New York. It was the highest close since Feb 21.

The Renewable Fuels Association, like other biofuel groups, had opposed the change as recently as last week in formal comments filed with the government. But the RFA's president, Bob Dinneen, said the group agreed to the negotiations after being told the White House would make the adjustment with it or without it. 

"I was told in no uncertain terms that the point of obligation was going to be moved, and I said I wanted to see one of our top agenda items moved," he said.

Jeff Broin, the chief executive officer of POET LLC, the largest U.S. ethanol producer, said the "back-room deal" didn't reflect major voices in the ethanol industry.

"Carl Icahn has long been a self-interested, vocal critic of the program," Broin said in an emailed statement.

Icahn wrote the EPA last year to complain that the current set-up of the program had resulted in a rigged marketplace and would cause "a number of refinery bankruptcies."

Critics questioned whether Icahn was acting in his own capacity or as a presidential adviser.

"It's all disturbing," said Todd Becker, chief executive officer of Green Plains Inc, the third-largest U.S. ethanol producer.

Federal ethics rules govern employees and outside consultants and experts, called special government employees. It's not clear than an informal adviser like Icahn would be covered by them, even in a case when the advice given produced a personal benefit, according to John Wonderlich, executive director of the Sunlight Foundation, a government transparency advocate.

"It's certainly unethical, but as to whether it breaks any laws isn't clear," Wonderlich said. 

Read the original story here : 'Purest Definition Of A Conflict': Icahn's $126 million Gain On Biofuel Deal Draws On Criticism