VLO, CVRR, PBF, HFC, DAL
After a one-day delay and another boycott by Democrats, the Republican Majority of the Senate Environment and Public Works Committee voted Thursday morning to approve Oklahoma Attorney General Scott Pruitt nomination to be EPA Administrator in the Trump Administration.
Pruitt will easily be confirmed by the full Senate as soon as next week.
Refiner stocks rose after Trump’s election in November on the expectation that the new administration will translate into relief for merchant refiners facing high compliance costs under the Renewable Fuel Standard (RFS).
A successful Senate confirmation vote for Pruitt could be a catalyst for another bump in stocks of affected independent refiners.
Pruitt’s committee vote was delayed one day after Senate Democrats boycotted the hearing on Wednesday. Today Chairman Barrasso and the Republicans voted to change the committee rules requiring the participation of at least two Democrat members to vote on a nominee and approved Pruitt by a majority vote of 11 Republican Senators. Democrats on the committee boycotted the vote again today with not a single Democrat Senator attending the hearing.
During his confirmation hearing, Pruitt reiterated his support for the Renewable Fuel Standard but specifically declined to oppose shifting the point of obligation for compliance from refiners to blenders and retailers.
We believe that Pruitt declining to answer the question on shifting the point of obligation is a sign that he is open to making the change. It is important to note that EPA can do this through a proposed rulemaking and does not require any approval or action from Congress.
Such a move would be a boost to merchant refiners like Valero, CVR Refining, PBF Energy, Philadelphia Energy Solutions, HollyFrontier, CVR Refining and Delta Airlines’ Monroe Energy. Compliance costs for these companies are in the hundreds of millions and for some companies even exceed labor costs.
