Carl Icahn, the billionaire investor and adviser to President Donald Trump, said he’s betting on a decline in the market for renewable-fuel credits that he’s urging the president to overhaul.
Icahn participates in the market through CVR Energy Inc., the oil refiner in which his Icahn Enterprises LP owns an 82 percent stake. CVR is required to buy the credits, known as renewable identification numbers, or RINs, when it makes gasoline. But Icahn said it’s delaying those purchases in a wager that prices will fall. In effect, he’s shorting the market.
“I’m not selling ’em, I’m not buying ’em,” the 81-year-old investor said in an interview at his New York office last week. “Hey, this is what I do in the market. I’m taking a chance.”
Suspicions that Icahn was speculating in the opaque RIN marketplace have been circulating for months. His critics deem it a conflict of interest because Icahn has sought to influence the Environmental Protection Agency’s policy as an unpaid Trump adviser on regulation, often in ways that cause price swings.
“It’s bothersome that one guy can control RIN markets like this,” said Brooke Coleman, executive director of the Advanced Biofuels Business Council, which opposes the policy change Icahn is pursuing.
Obligation Point
The Bush-era law known as the Renewable Fuel Standard requires that billions of gallons of biofuel be added to the nation’s gasoline. Today, about 10 percent of U.S. motor fuel is made of corn, not oil. The EPA enforces this mandate by requiring refineries and importers to blend in ethanol and other biofuels, or buy RINs from those who do the blending.
CVR’s refineries in Kansas and Oklahoma rely mostly on buying RINs from others, and Icahn has said a recent spike in the price of credits is costing the company more than $200 million a year. Last year, he became an advocate of changing EPA rules so fuel blenders, rather than refiners, face the compliance burden. In industry jargon, he wants to shift the point of obligation.
Icahn’s campaign got a boost when Trump won the election last year, causing RIN prices to decline. They also dropped when Trump, with input from Icahn, selected Scott Pruitt to lead the EPA, and again when the president-elect announced Icahn’s special adviser role. Yet another decline came on Feb. 28, after Icahn conveyed a proposal to the White House to change the point of obligation and helped persuade an ethanol group to drop its opposition.
RINs tracking 2017 ethanol consumption targets cost about 36 cents apiece as of March 15, data compiled by Bloomberg show. By comparison they fetched 91 cents on Nov. 8, Election Day.