The owners of Philadelphia Energy Solutions (PES), the East Coast’s largest refinery, have promised that their decision to declare bankruptcy does not pose an immediate threat to the plant’s 1,100 jobs. Nonetheless, the employees and their unions are justifiably skeptical and nervous. Plant closures of any kind can be devastating for workers, their families, and their communities. As a result, any hint that jobs are on shaky ground brings out the fighting instinct among those of us who care deeply about working families.
This is especially true at PES, which has faced the threat of closure before. It took a heroic effort in 2012 by the United Steelworkers of America, other unions, and local, state, and federal officials to find a buyer for the refinery and provide necessary financial support to save the plant.
{mosads}Sadly, the ongoing PES bankruptcy turned intensely political when it was used to justify a frontal assault on the bipartisan Renewable Fuel Standard (RFS). This 2005 law promotes domestic renewable energy like ethanol, biodiesel, cellulosic biofuels, and other fuels from American-grown sources. Refiners can add biofuels to the fuel mix each year, or purchase credits from another company that does (called “RINs” for Renewable Identification Numbers).
Oil companies helped design the system, and the vast majority of refiners have invested in renewable infrastructure, with companies like Tesoro calling it the “rational, business-oriented” approach. Nonetheless, the oil industry opposes the RFS, primarily because killing it would mean greater reliance on oil in the U.S.
But the RFS did not cause the PES bankruptcy. Independent and federal data have found that refiners do not bear the cost of RINs they may purchase, as some claim. The Trump administration’s Environmental Protection Agency concluded that “refiners are generally able to recover the cost of RINs in the prices they receive for their refined products, and therefore high RIN prices do not cause significant harm to refiners.” In other words, after refiners purchase credits related to biofuels, those costs are included in the price of finished gasoline. Refiners recoup their costs when the product is sold to distributors.
In fact, PES’s competitors, including other “merchant refiners” like CVR and PBF, are “floating on a sea of cash,” as Bloomberg noted. Valero’s profits last quarter jumped six-fold. These competitors are subject to the same requirements as PES, and their businesses are doing very well. Why is PES different? A recent and very thorough University of Pennsylvania report gives a detailed analysis of a long list of factors unrelated to the RFS and particular to PES that caused the bankruptcy. A brand new Reuters analysis reinforces this conclusion: the RFS did not cause PES’s economic problems.
None of this is to suggest that the fault for PES’s bankruptcy lies with the men and women who fuel America with their hard work every day in that refinery. At the same time, the hundreds of thousands of Americans whose jobs depend upon the American biofuels industry should not be left out of the discussion, as they might be, if the story of the PES bankruptcy devolves into a false narrative pitting refinery workers against rural jobs.
American workers are benefitting from middle-class jobs at over 200 U.S. biorefineries, like Pennsylvania Grain Processing, where 85 workers supply a quarter of the Keystone State’s ethanol demand. Building and construction trades men and women build biofuel plants. Manufacturing workers are running the biorefineries. American seafarers and truckers ship feedstocks that are processed into biofuels by land and barge. Unionized workers manufacture farm equipment used to grow and harvest crops that become biofuels — just ask the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW). For these workers, the Trump administration’s support for homegrown biofuels has been a rare ray of hope.
Workers in these middle-class jobs have helped to make the United States the world’s top exporter of ethanol which, in turn, reduces the U.S.’s trade deficit, which has been bloated by oil imports for far too long. And the growth of biofuels at home has helped to drive economic development in rural areas of the United States that too many public policymakers have forgotten or ignored.
Any suggestion that we must choose between oil jobs and the substantial benefits that flow from these biofuel jobs is false. When it emerges from this latest bankruptcy, the court should require that PES invest in long-term job security for the men and women who operate and maintain that plant, like other Northeast refiners that are raking in huge profits. At the same time, those who care about restoring America’s middle-class should join in defending the RFS.
Seth D. Harris is the former acting U.S. secretary of Labor and deputy U.S. secretary of Labor in the Obama administration.