Philadelphia Energy Solutions wrong to blame renewable fuel standard for bankruptcy

Philadelphia Energy Solutions (PES) filed for bankruptcy last week, pointing fingers and laying blame squarely on the Renewable Fuel Standard (RFS), a federal program that requires refiners to blend increasing amounts of ethanol and other biofuels. That may make for a provocative headline, but the public and PES’ 1,100 employees deserve to know the truth: PES has no one else to blame but itself. PES operates one of the nation’s oldest refineries, which is handicapped by hopelessly antiquated technology. This is not the first time the refinery has found itself in a precarious financial position. In 2012, the Carlyle Group and Sunoco rescued the refinery from bankruptcy, thanks to a taxpayer-funded rescue package. The following year, PES invested in new infrastructure to allow the importation of cheap oil from North Dakota. While PES was able to capitalize on that investment in 2014 and 2015, the collapse in oil prices and the end of the U.S. crude export ban in late 2015 hit the refiner hard and left it hostage to the higher-priced Brent crude index. Since that time, PES has been dealing with a substantial debt burden.