Icahn Reaps $60 Million Windfall as Trump Regulations Adviser
(Bloomberg) -- Government work has paid off handsomely for billionaire Carl Icahn.
CVR Energy Inc., his oil refining company, saved about $60 million in the first quarter because of expectations that the federal government will ease a regulation involving renewable fuels, securities filings show.
It’s much more than a lucky break. As a “special regulatory adviser” to President Donald Trump, Icahn himself has been advocating the kind of relief that will benefit his company.
Icahn’s cost savings show how the Trump administration has let officials’ outside business interests influence policy decisions. Richard Painter, a University of Minnesota Law School professor and White House ethics counsel under President George W. Bush, calls Icahn’s role “a clear conflict of interest.”
Even before the magnitude of Icahn’s gain was known, a group of U.S. Democratic lawmakers sent a letter to regulators urging them to investigate whether Icahn used his role as adviser to gain unfair trading advantages.
Brandee Stephens, a spokeswoman for Sugar Land, Texas-based CVR declined to comment. Icahn didn’t return several messages left for comment.
Icahn’s windfall results from potential changes in the George W. Bush-era law known as the Renewable Fuel Standard. It 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 from corn, not oil.
Biofuel Mandate
The U.S. Environmental Protection Agency enforces this mandate by requiring refineries and importers to blend in ethanol and other biofuels, or buy credits from those who do the blending. The credits, called renewable identification numbers, or RINs, trade in an over-the-counter market.
CVR’s refineries in Kansas and Oklahoma rely mostly on buying RINs. Icahn has said a spike in the price of the credits last year had cost the company $200 million annually. He became an advocate of changing EPA rules so fuel blenders, rather than refiners, face the compliance burden.
On March 9, Icahn said he was betting against the credits by delaying purchases in the expectation their value would fall. It has already been a shrewd wager for CVR, in which Icahn Enterprises LP owns an 82 percent stake. Prices for RINs have dropped 19 percent since Trump’s election.
Consider the swing in the cost of the credits at CVR, which spent $53.5 million in the fourth quarter of 2016 and saw a $6.4 million benefit in the first quarter, filings show. It wasn’t clear why the company reported a gain.
Other refiners such as San Antonio, Texas-based Valero Energy Corp. have benefited, too. A Bloomberg analysis of regulatory filings by eight refiners found they spent $397 million in the first-quarter on the energy credits, down from $583 million in the fourth quarter, according to regulatory filings.
Other market forces may also be at work. Refiners have been blending record amounts of ethanol into gasoline this year, so there’s speculation that there will be more than enough to meet demand, according to Mark Broadbent, a senior research analyst who covers refiners at Wood Mackenzie in Houston.
The cost savings from the credits make up only part of Icahn’s recent winnings from CVR. In the six months since Trump’s Nov. 8 election win, the value of Icahn’s stake in the Texas refiner has increased by more than $600 million, to $1.6 billion.
12
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Gunvor CEO Sees Russian Refining Capacity Taking Hit from Drone Strikes
- These Factors Helped Brent Oil Price Break Above $85
- Sinopec Engineering Posts Higher Annual Petrochemicals Revenue
- Imperial Pipeline in Winnipeg Goes Offline for Three Months
- Gaz System to Acquire Gas Storage Poland
- Subsea7 Secures Contract to Service Woodside's Trion
- Adnoc Inks Supply Deal for Ruwais LNG Project with Germany's SEFE
- EIA Boosts USA Crude Oil Production Forecasts
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension