Diary

Trump puts PA on the line in 2020? U.S.’ Largest East Coast Refinery Declares Bankruptcy, Citing Pro-Iowa, Anti-Pennsylvania Renewable Fuel Standard

The U.S.’ largest oil refinery on the East Coast has declared bankruptcy, citing the Renewable Fuel Standard (RFS), a regulatory subsidy favored by pro-ethanol Iowa lawmakers including Sen. Chuck Grassley and Sen. Joni Ernst, and opposed by lawmakers from manufacturing states, including the Keystone State.

Bloomberg reports:

The company, a joint-venture between The Carlyle Group LP and a subsidiary of Energy Transfer Partners LP, filed a petition Sunday in U.S. Bankruptcy Court in Delaware. Chief Executive Greg Gatta said in a memo obtained by Bloomberg News that the company had a prepackaged reorganization plan and cited the more than $800 million it paid since 2012 to comply with the U.S. government’s Renewable Fuel Standard as a key factor for the decision.

[…]

Meanwhile, the company faced rising costs to comply with renewable fuel regulations. It spent $218 million to do so in 2017, its second-largest expenditure after crude oil purchases and more than double its payroll, Gatta said in the memo.

Refining industry sources say it’s likely that a majority of PES workers voted for Trump in the 2016 election, and that by caving to Grassley and Ernst on the RFS and biofuels policy more broadly, he could be wiping off the table any chance of winning Pennsylvania again.

Grassley and Ernst have both played hardball over biofuels policy with the administration in recent months, with Grassley reportedly threatening to hold up judicial nominations in order to force Trump’s hand in a more pro-ethanol direction.

Trump won Iowa handily in 2016, but won Pennsylvania by a slim margin.

While both states are theoretically swing states and could be again in 2020, the likelihood is that Pennsylvania will be much more easily won by Democrats than Iowa.

While Iowa is perceived as being solidly pro-ethanol, staunchly anti-ethanol Sen. Ted Cruz in fact won the 2016 Iowa caucuses over pro-ethanol Trump.

Pennsylvania voters, like most manufacturing states, tend to view the RFS considerably less favorably even than Iowa in 2016, when Cruz unexpectedly won.