Guest essay by Eric Worrall
h/t Willie Soon – the hangover of President Obama’s war on cheap energy is still causing financial hardship. Philadelphia Energy Solutions, which employs 1,100 people, has been driven into financial distress by the cost of compulsory green energy mandates.
Exclusive: Philadelphia Energy Solutions to file for bankruptcy – memo
Jessica DiNapoli, Jarrett Renshaw
5 MIN READ
(Reuters) – Philadelphia Energy Solutions LLC, the owner of the largest U.S. East Coast oil refining complex, announced to its employees on Sunday that it plans to file for Chapter 11 bankruptcy, according to an internal memo reviewed by Reuters.
The bankruptcy would come six years after private equity firm Carlyle Group LP (CG.O) and Energy Transfer Partners LP’s Sunoco Inc rescued Philadelphia Energy Solutions from financial distress, in a deal that was supported by tax breaks and grants that saved thousands of jobs.
Following an agreement with its creditors, the company has secured access to $260 million in new financing, and said it expected the bankruptcy filing to have no immediate impact on its employees, according to the memo, which was confirmed by a spokeswoman for Philadelphia Energy Solutions. The spokeswoman declined to comment further.
Philadelphia Energy Solutions owns two refineries, Girard Point and Point Breeze. It can convert about 335,000 barrels of crude oil per day to products such as gasoline, jet fuel and diesel. It employs about 1,100 people.
Part of the refiner’s financial troubles stem from a costly biofuels law called the Renewable Fuels Standard, which is administered by the Environmental Protection Agency and requires refiners to blend biofuels into the nation’s fuel supply every year, or buy credits from those who do.
Since 2012, Philadelphia Energy Solutions has spent more than $800 million on credits to comply with the law, making it the refiner’s biggest expense after the purchase of crude, according to the memo.
…
Obviously our hearts go out to the workers, who must by now be wondering when their paycheques will stop. But this story has wider implications – how many other US energy businesses are close to the brink, thanks to the lingering after effects of President Obama’s green energy mania?
Former Obama EPA head Gina McCarthy once boasted that Trump has “Limited Room to Manoeuvre” – Gina claimed her EPA administration had created a tangled thicket of green court rulings and regulations which she thought would be impossible for President Trump to clear away. The evidence suggests that Gina might have been right – despite President Trump and Scott Pruitt‘s best efforts, a year after President Trump’s election the EPA is still causing totally unnecessary hardship and financial distress for major US businesses.
I suggest it is time to consider more radical surgery, time to end this ongoing menace to US prosperity once and for all.
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So like restaurants had to buy parsley, refiners have to buy renewable fuel they no one needs.
http://presentationsunplugged.com/blog/tag/mafia-parsley/
Eric W wrote:
“I suggest it is time to consider more radical surgery, time to end this ongoing menace to US prosperity once and for all.”
I have to agree Eric – it is time for radical surgery – “Scrap the Lot!” – but properly done, it will cut deeply into Trump’s farm vote.
I used to Chair the Mining and Technical Committees of Syncrude Canada, one of the world’s largest and most complex refineries. Later I was CEO of an oil company that also owned a corn (fuel) ethanol plant in the USA. These are both complicated businesses, but I do know a bit about them, given my two engineering degrees.
First, on the refinery: I will not speculate on why this plant went under – refining is a highly-competitive, razor-thin-margins business, where simple decisions such as how and when to hedge the price of your feedstock can make or break you. You would have to be on the inside, or spend months in careful analysis, to obtain a credible answer. Excess regulation of any sort, including biofuels mandates, only add to the difficulties of making a profit.
Biofuels are much simpler. None of it makes sense, economically or environmentally, and a rational man would scrap the lot, in my opinion. The rapid depletion of the Ogalalla aquifer in the USA is of particular concern. What sense does it make to excessively deplete the world’s most important agricultural aquifer to make corn ethanol and other biofuels that nobody should want or need? This is the green movement at its best – costing a fortune AND screwing the environment.
The sole exception for biofuels may be where you can use waste as a feedstock. We have a huge garbage disposal problem in the world, and some form of pyrolysis-to-fuel may make sense, if one can control the resulting air pollution.
“The rapid depletion of the Ogalalla aquifer in the USA is of particular concern.”
What is next Allan concern about depleted Uranium? The word ‘concern’ sets off my BS meter?
I was actually a practicing engineer which in no way made me an authority on US geography.
The US ‘Midwest’ is not the middle west which is more correctly labeled the ‘Great Plains’.
Kit – Nothing you wrote makes sense.
You wrote: “The US ‘Midwest’ is not the middle west which is more correctly labeled the ‘Great Plains’.”
That was Irrelevant tripe. I referred clearly to the Ogalalla Aquifer. Its location is not in dispute,
The Ogalalla Aquifer is rapidly depleting due to excessive withdrawal. Here is recent evidence:
https://www.usgs.gov/news/usgs-high-plains-aquifer-groundwater-levels-continue-decline
That excessive depletion is also not in dispute.
Regarding one’s technical experience, my two engineering degrees and decades of experience enabled me to write the Hydrogeological Impact Assessment for the new Shell refinery that was built near Edmonton Alberta years ago, among other such assignments.
If you were actually a “practicing engineer” you apparently were not a Professional Engineer, which I still am. If you were ad P.Eng. or PE, you should re-read your Code of Ethics regarding your conduct towards fellow Professional Engineers.
Regards, Allan
According to the Solar Energy Industries Association, the tariffs imposed on the import of Solar panels would increase prices and kill 23,000 jobs. It maybe that such job losses are a worthwhile sacrifice for Mr.Trump in his efforts to ensure renewable energy schemes do not take root in the US. When will we have an article on the hundreds of coal miners thrown out of work under the Trump administration ?
Whether job losses are a sacrifice someone is prepared to make depends on their own prejudices and beliefs.
There is no more reason to impede renewable energy than there are to promote it. Let it have its fair share of the market, no more, no less. No subsidies, no special tax/tariff or whatever.
I am confident that the Chinese will do just what the Japanese did when USA used dirty tricks to keep their cars from Japan out of US market. They stopped shipping finished cars, shipped pieces to newly purchased US factories (with US workers inside) to finish the cars. They didn’t care for lost jobs in Japan, as the workforce was shrinking there, and they could ship them elsewhere anyway; they did care about the profit (they continued making).
Thats a reasonable point paqyfelyc. I also wonder whether the avoidance of subsidies would be applied to all energy related industries, or indeed to all industries as a principle.
Of course there are no subsidies to other energy related industries, as has been shown over and over again.
“Of course there are no subsidies to other energy related industries, as has been shown over and over again.”
Links to support that claim?
@chris
MarkW comment was obviously /sarc ,
The only purpose for tariffs is to increase profits for the politically well connected.
That said, I love it when those who live by politics die by it.
yep.
Trouble is, by design subsidies and tariff benefit hugely to a small segment of the population, who do have the urge to lobby for it, while the remaining population only suffer a minuscule amount and have no urge to protest, and even less to lobby against. I mean, you may feel somewhat angrier because you pay your gas a few dozen bucks more than you would without ethanol mandate, but that’s not enough for you to pay a lobbyist to stop it, is it? At some point you may just vote for some guy promising to “drain the swamp”, with no guarantees that he succeeds or even really tries.
Not sure even a constitutional ban on subsidies, on using taxpayer money for any business operation, would prevent that. There are so many ways to bypass such a ban
Visit here then think long and hard.
Visit here
Coz if you you and many other people don’t, we are all going to a very hot place where we will have an infinite amount of time to think.
Not only are we humans smashing the roof timbers out of our home (to put in the living room stove and keep warm), we are digging, literally, our own graves.
I”m trying to recall learning of a parasite somewhere (possibly a wasp injecting eggs into a caterpillar) that causes the infected creature to go through all sorts of crazy contortions, do stupid dumb things, eat noxious stuff and generally act completely crazily.
Until it inevitably dies.
Horribly.
Such a thing, to my mind, exists for the Human Animal.
Corn is but one manifestation of that thing but this story illustrates it perfectly
and they like to think of themselves as green..
http://agebb.missouri.edu/news/pics/lg067.jpg
Are there the words………………
Yes, there are ‘words’. It’s a muddy field, after a heavy deluge….
What are you trying to say???
https://en.wikipedia.org/wiki/Dicrocoelium_dendriticum
Turn the ant into a night zombie aiming at being eaten by a grazing animal
And therin lies the key to Green plans: bankrupt industry, as much of it as possible. Look at Oz. The liberal politicians are absolutely thrilled that South Australia no longer has industry that needs large amounts of energy. It’s Great!
What about the jobs? The people?
This is great news because of where it is. Shut down the rest of them in the northeast–they deserve the consequences.
Can the refinery workers sue Iowa farmers and biofuel lobbyists? Go for it.
Seems hard to sue any people just because a law was enacted, that has detrimental effect on you.
That has not stopped certain AGs from throwing resources at their targets.
…and those lawmakers make their pilgrimage through Iowa for reelection suck ups.
It will be years, if not generations, before we see the full extent of the deliberate damage Barrack Obama did to us.
As CMA has recently destroyed the agent stockpiles throughout the US, it seems to me that those sites would be ideal for new refineries. They aren’t large population centers nor very pretty (where else are you going to store chemical agent). And they have some infrastructure and technician support already in place, who now need jobs.
And in the past few years I’ve learned that stored biodiesel is a highly desirable food source for algae and bacteria. Leading to ruin of the biofuel and contamination of the storage tanks and valves, or even vehicle engines.
There is NO savings w/ biofuels, neither of money nor of the environment.
US biofuel mandate increases biofuel use year on year
EPA article on biofuel mandates
Those are the targets that were specified in the EISA, passed by Congress in 2007 and signed by GW Bush.
I don’t think they’re hearing you, Nick.
“Those are the targets that were specified in the EISA, passed by Congress in 2007 and signed by GW Bush.”
Why do you continue throughout this thread to cite government approval of a policy as a moral justification of said policy? By your logic, Trump’s dismissal of the Paris Accord is also moral policy wouldn’t you agree?
If not don’t you contradict yourself? If you don’t contradict yourself, why don’t you?
And if you do agree, then don’t you contradict yourself on the morality of the biofuel policy versus the morality of the Paris Accord? Why is one environmental policy justified while the other is not?
In other words, no matter where you go, regardless of your choice, don’t you contradict yourself? If so, why should anyone listen to you? If you don’t contradict yourself, why don’t you?
“to cite government approval of a policy as a moral justification of said policy”
I don’t. I simply point out that it wasn’t, as the article claims, ” the lingering after effects of President Obama’s green energy mania”. It isn’t even really green policy. It is the result of Republicans and others in Congress trying to drum up votes in Iowa and Nebraska. As Eric noted above, even Trump campaigned calling for a higher ethanol mandate.
It makes sense to point that out up-thread, but not here. Maybe you just got lost in your zealousness to correct the record.
what do you mean, Nick?
This policy wasn’t actually Obama’s, despite his claim, but Big Oil Bush’s ?
You mean, Obama boasted, or even (will you dare say that?), lied?
“This policy wasn’t actually Obama’s”
The legislation, including the targets in the above table, were from Bush’s time. And then there’s this, from November 30, 2017 2017:
“On Thursday, the Trump administration sided with the farmers and announced that it would stick closely to the current rules and quotas for fuel: Refineries must blend about 20 billion gallons of biofuel — much of it ethanol made from corn — into the nation’s gasoline supply, a level largely unchanged from last year.”
Green maniacs are everywhere. Note that the target set by Congress in 2007 was actually 25 billion gallons.
WOWO Nick
If the mandate from 2007 was 25bn gallons and President Trump has indicated only 20bn Gallons to be blended, then it would appear that President Trump has slashed the mandated ammount by 20%. Just chipping away at the mandates until they are nonexistant
Sy: I think it’s because people keep trying to blame it on Obama.
That wasn’t the case with mark4asp. All he did was quote an article produced by the EPA itself:
https://wattsupwiththat.com/2018/01/22/green-energy-mandate-bankrupts-east-coast-oil-refinery-1100-jobs-at-risk/#comment-2725330
Hence my question to Nick stands as valid.
could it be that Obama and minions (like his EPA head Gina McCarthy) kept trying to boast about it?
A couple of good points have been made here:
1. The ethanol mandate is a questionable policy that has some environmental roots but is really a product of typical politics. We could call it a gravy train for corn producers and another example of the power of the agricultural lobby, but that would not be the whole story. It is a great example of an idea that had some merit at the time, but also has taken on a life of its own with many unforeseen consequences.
2. The failure of PES would appear to be mostly self-inflicted. Many here prefer to pay the blame game and look to government regulation as the institution at fault. Renewable energy mandates, another product of politics, make life difficult for refiners, but I would bet money that well-run businesses look at this difficulty and simply view it as a cost of doing business.
In this era of toxic politics we all tend to look for a fall guy. PES was a victim of previous administrations who pushed political solutions that we would never consider today, right? Uh, wrong. Today’s sausage factory looks a lot like yesterday’s, but with a new set of sausage stuffers.
“1. The ethanol mandate is a questionable policy….”
Scaft1 did you read the 2005 Energy Bill? I have read a large part of the the 1000+ page legislation. I think it is very good legislation to implement the 2001 National Energy Policy.
Renewable energy is a small part of the bigger energy picture. There is no mandate for corn ethanol.
You might ask why the critics in Texas and California did not lead Iowa wind and biofuels?
The answer is easy for California. Environmental regulations impede getting anything done there. Texas was already a leader in renewable energy under Governor Bush with modest mandates. Texas is rich with fossil fuels and being a leader with sugar cane might be more of a distraction.
“If you were actually a “practicing engineer” you apparently were not a Professional Engineer, which I still am. If you were ad P.Eng. or PE, you should re-read your Code of Ethics regarding your conduct towards fellow Professional Engineers.
Regards, Allan”
The problem I have with Allan and all the like of college professors or other PhD’s that cite themselves as an authority.
Then they start piling BS high and deep on subjects where they are not an authority.
So what does an aquifer one place have to do with growing corn someplace else? Did this issue of irrigating with ground water only occur after the mandate? Does this have anything to do with a refinery in NJ?
I was once in a room with 5 PhD geologists. The big picture was how the flow of ground water would carry fission products to the nearest drinking water well. The sub-context was how fission products affected water turning into hydrogen and water. Four were yelling at me that I did not have a PhD so therefore I was wrong. The fifth terminated the debate by saying he would work with me to get the terminology right.
About the same time, I had to tell a PhD in nuclear physics from Los Alamos that they derived the equation wrong for input to the model.
Two points, first even experts make mistakes. It is somebody’s job to catch those mistakes. Second being an authority in one area does not make you an expert in another.
Ahhh, those stupid American politicians. Why don’t they use their legislative powers to pass superior laws instead? While Obama probably meant well, had he been more like Canadian, Australian, or EU politicians he may have done something truly bold. As one example, imagine how much more energy efficient the world would be if he signed legislation that would lower the boiling point of water to 75ºC or change Carnot efficiency? Oh, how I miss the Rhinoceros Party.