* Renewable credits, corn, refining prices swing in volatile
* Trump advisor Icahn criticized due to refinery stake
* RINs prices have risen steadily in recent years
(New throughout, updates prices to close, adds bullet points)
By Chris Prentice
Feb 28 The White House on Tuesday denied that
President Donald Trump planned to issue an executive order to
change the national biofuels program, after the U.S. Renewable
Fuels Association (RFA) said Trump's team had informed the group
an order was pending.
Trading in U.S. refinery shares, fuel futures and corn
prices was turbulent on the news of the pending order and its
subsequent denial, as investors puzzled over what it would mean
for the price of gasoline, ethanol and shares of companies that
The RFA issued a statement early on Tuesday that said a
member of the Trump administration had called to inform the
group the president intended to sign an executive order that
would shift the onus on combining biofuels with gasoline away
from refiners. The order would require companies further down
the supply chain, such as retailers who sell gasoline, to
shoulder that load.
Refiners have long requested this change, saying the
biofuels program has hammered their profits.
White House spokeswoman Kelly Love, however, said on Tuesday
afternoon "there is no ethanol executive order in the works."
Ethanol and fuel retail groups reacted quickly to the
reports. Trump’s regulation adviser, billionaire investor Carl
Icahn, is majority owner of CVR Energy, a refining
company that would benefit from the change. That stock is up 80
percent since Trump's election in November.
Even after the White House denial, RFA Chief Executive
Officer Bob Dinneen stuck by his statement, saying there is
"certainly something in the works, but they're not going to
confirm it until they are ready to roll with it." He declined to
identify who in the Trump administration contacted the
"Despite our continued opposition to the move, we were told
the executive order was not negotiable," Dinneen said.
The Renewable Fuel Standard requires fuel companies to use
increasing amounts of biofuel blended with gasoline and diesel.
Former U.S. President Barack Obama expanded the rules, which
started under his predecessor, George W. Bush, when gasoline
prices were near records.
Refineries without operations designed to blend biofuels
such as ethanol into gasoline have to pay for renewable fuel
credits, known as RINs, to meet U.S. environmental standards to
help reduce greenhouse gas emissions. The cost for refiners has
increased sharply in the last few years; nine major publicly
traded refiners paid $2.5 billion in 2016 for RINs costs, a 78
percent increase from 2015.
Among those that have pushed for the change is Icahn, who
holds an 82 percent stake of CVR. That company's shares jumped
on Tuesday before paring gains after the White House denial;
they ended up 3.5 percent on the day to $22.92 a share, on
heavier-than-usual trading volume of 1.7 million shares.
Icahn was unavailable for comment, and CVR declined to
Emily Skor, CEO of biofuel trade group Growth Energy,
expressed concern about any role Icahn may have played in
planning changes to the program.
"I assure you this is no deal for anyone but Carl Icahn,"
she said. "If we had been approached with this deal, we would
have flat-out rejected it."
Seven Democratic senators, including Elizabeth Warren of
Massachusetts, sent a letter to the White House this month,
saying Icahn’s role as an adviser to Trump created financial
conflicts of interest and called for a review.
Shares of U.S. refiner Valero, which would also
benefit from the changes, ended up 1 percent on Tuesday to close
at $67.95 a share.
Biofuel organizations and groups representing fuel retailers
and integrated oil companies like the U.S. units of Royal Dutch
Shell Plc and BP Plc have opposed the change,
which they say will complicate managing the program.
One source said the RFA was told the executive order would
include incentives for ethanol and biodiesel in a tradeoff for
the blending shift.
Those changes could include a waiver to allow greater
volumes of ethanol to be blended into gasoline in the summer, a
review of how the Environmental Protection Agency estimates
emission impacts of biofuels, and support for a congressional
tax credit for domestic producers of biodiesel, the source said.
Chicago Board of Trade corn futures ended up about 1.7
percent. CBOT soyoil, which is used for biodiesel, rose
Compliance credits used to meet the annual biofuel blending
standards traded around 43 cents on Tuesday from 47 cents to 48
cents previously, paring big morning losses.
(Additional reporting by Jarrett Renshaw and Michael Hirtzer,
Emily Flitter and Jessica Renick-Ault; Writing by Richard
Valdmanis; Editing by Marguerita Choy and Chizu Nomiyama)