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Energy & Environment

Abbott Says Regulations Are Stunting Refining Sector Growth

Refineries generally don’t like the Renewable Fuel Standard, but the sector isn’t exactly struggling

ExxonMobil Baytown refinery
Dave Fehling / Houston Public Media
ExxonMobil's Baytown, TX refinery

Governor Greg Abbott said the federal Renewable Fuel Standard is stunting oil and gas refineries and threatening jobs in Texas. But refineries on the Gulf Coast aren't exactly struggling.

Per that federal mandate, refineries have to include in their mix a certain amount of "renewable" fuels like ethanol. Facilities owned by majors like ExxonMobil can handle the requirement, but that's not always the case with smaller refineries. So, the smaller ones buy renewable fuel credits instead.

Abbott is asking the Environmental Protection Agency to give Texas a pass on that part of the program.

In a letter to EPA Administrator Scott Pruitt, Abbott said rising costs for the credits are causing a "severe economic hardship" for refineries and blocking new projects.

Still, that doesn't mean it's all doom and gloom in the refining sector.

"U.S. refining capacity is at an all-time record as we speak today," said Houston oil and gas consultant Andrew Lipow.

Lipow said while the credits can be costly, they aren't necessarily killing the sector.

"We have seen a number of expansions led by Valero at McKee, Corpus Christi and Houston, and we've had some grassroots construction of what are known as ‘splitters' down in the Corpus Christi and Houston area," Lipow said.

Still, refineries do broadly oppose renewable fuel standards, and the smaller players want a fairer playing field against the big ones.

An EPA spokesperson said the agency is reviewing the governor's request and "will respond through the proper channels."

The agency recently dealt a blow to refiners when it turned down their proposals to change the renewable fuels program.


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