25 February 2018 - Do Oil Companies Need Help?

A couple of decades ago, I would never have dreamed, that as a taxpayer, I might be asked to provide financial help for oil companies or oil refineries. But friends, that is what could happen. Do you remember back in the 70’s when we had the long gas lines, prices moving above $5 and $6 a gallon and double-digit earnings with every quarterly earnings report from petroleum companies? I certainly remember it. Now there is a meeting coming up in Washington, called by President Trump, to take a look at changing some of the rules and regulations to help the oil industry.

The meeting comes as the oil industry and the corn lobby, both powerful forces in Washington, are clashing over the future of the Renewable Fuel Standard (RFS). That is a decades-old regulation that requires refiners to cover the cost of mixing bio-fuels such as corn-based ethanol into their fuel.

President Trump’s engagement reflects the high political stakes of protecting jobs in a key electoral state. Oil refiner Philadelphia Energy Solutions (PES), which employs more than a thousand people in Philadelphia, declared bankruptcy last month and blamed the regulation (RFS) for its demise.

Who will be coming to the meeting called by the President? Republican Senators Ted Cruz of Texas, (home of major oil refineries), Chuck Grassley and Joni Ernst of Iowa (Senators from a major corn producing state) along with EPA administrator Scott Pruitt, Agriculture Secretary Sonny Perdue and, potentially, Energy Secretary Rick Perry. That meeting will focus on providing relief for the Philadelphia refiner and other refineries claiming financial damage from RFS.

The President of the Corn Growers Association said - “This is not a matter of the RFS creating costs for the Philadelphia oil refinery, it is a case of bad management on their part with refinery owners and investors failing to take responsibility for their poor business decisions.” Now they want help from you and me. Well, don’t come to me for help, I did more than my share back in the 70’s and 80’s when every visit to the gas pump cost me up to $6.00 a gallon. Let your Congressman know…No tax dollars for the oil industry.

My thoughts on Samuelson Sez.