WASHINGTON – Costly Renewable Fuel Standards (RFS) credits are driving refineries out of business. While the ethanol industry strong disagrees with that conclusion, it’s one that Sen. Tom Coburn (R-OK) says is true, Environment & Energy Daily reports. 

The senator argues that two Oklahoma refineries are likely to shut down because of the expense of RFS credits. “We've got a regulation out there that's actually going to kill our ability to provide gasoline to the country,” he said.

The RFS provides refiners will a credit for blending ethanol with petroleum-based gasoline. Then the refiners can purchase or offload those credits to comply with the annual renewable fuel obligations. 

The credits, also called renewable identification numbers, have risen in price this year, inching up from a few cents to more than a buck, before hovering around 60 cents. Analysts point to refiner panic about hitting the 10% “blend wall” and gobbling up all credits on hand.

In Oklahoma, small refineries have had to buy high in order to obtain the necessary credits. “What's getting ready to happen in our country is all our refiners are going to go broke,” said Coburn. Coburn is asking the Environmental Protection Agency to change its RFS, which now mandates refiners blend more than 10% ethanol into regular gasoline.

However, the ethanol industry has a different view. “It's laughable that [Coburn's] bemoaning the fact the refiners are going broke,” said Bob Dinneen, president and CEO of the Renewable Fuels Association. “The oil and gas industry is probably the most profitable industry on the planet right now. I'm not sure why he's crying crocodile tears for them.”

The ethanol industry says refiners should up the ethanol blend to make E15 to eliminate “blend wall” problems. “The issue is this: If refiners are having to buy credits, it's because they don't want to blend more ethanol into gasoline,” said Dinneen. “And there's an easy solution to the problem: Blend more ethanol.”