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Marathon looks for spring fuel mandate change

01 Feb 2018 21:19 GMT
Marathon looks for spring fuel mandate change

Houston, 1 February (Argus) — Marathon Petroleum said it expects US legislators to propose changes to federal fuel mandates this spring.

Senators and US Representatives would soon propose changes to the Renewable Fuel Standard (RFS), chief executive Gary Heminger said during a quarterly earnings call today.

"I am fairly confident that we are going to get there this spring," Heminger said.

The RFS requires refiners, importers and other companies ensure minimum volumes of renewables blend into the transportation fuels they add to the US supply. Obligated companies must acquire renewable identification numbers (RINs) to prove compliance with the blending mandates. Companies that do not blend must acquire RINs from others, including competitors.

Independent refiners have chafed at the program for years, while agricultural interests and the renewable fuels industry have staunchly opposed any revision to the more than ten-year-old program.

Sens. John Cornyn (R-Texas), Joni Ernst (R-Iowa) and Chuck Grassley (R-Iowa) as well as US Reps. Bill Flores (R-Texas) and John Shimkus (R-Illinois) have joined others discussing potential legislation on the program.

Sources on all sides of the talks have been evasive about the proposals that will make it into legislation, citing the sensitive nature of the negotiations. Marathon Petroleum offered no specifics about what the company expected this year but suggested a full repeal.

"We are actually fairly optimistic about the legislative efforts that are ongoing in Washington, DC, led by Senator Cornyn and others," Marathon president Don Templin said. "It will have a resolution that I think has some short-term relief but more importantly has a long-term solution to the RFS, elimination the mandate and allowing our transportation fuels and other transportation fuels to be able to participate in a free market."

Cornyn, Shimkus and Flores have confirmed their efforts to work on the RFS "for all stakeholders."

Sens. Grassley and Ernst have not responded to numerous requests for comment.

The January bankruptcy filing of Philadelphia Energy Solutions (PES) focused more attention on RFS and the cost of credits used to comply with the program, refiners have said.

Environmental Protection Agency administrator Scott Pruitt today repeated in a new television interview comments made earlier this week about the need to change the program.

"We need RIN reform," Pruitt said today. "It is something I have talked to Congress about — we have got to take steps to address this and I think there are many that understand this."

US independent refiner Valero in its own earnings call said discussions around changes to the program "have definitely heated up."

"There does seem to be more urgency and visibility and effort around this area in the past couple of months," Valero vice president of public policy Jason Fraser said. "We are more optimistic than we have been."

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