Later On

A blog written for those whose interests more or less match mine.

Why Make Something When Nothing Sells Just as Well?

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Corporations are sociopaths. For example, read this report by David Epstein in ProPublica:

It’s a fundamental law of nature… or at least nature legislation: For every action that the government takes to protect the natural environment, there is a cleverly corrupt reaction. An investigation by Bloomberg Businessweek profiled an extraordinary case of fraud that exploited the Renewable Fuel Standard program, which President George W. Bush signed into law in 2005. That’s what he gets for trying to lessen our dependence on foreign oil… sucker! Your six W’s:
What’s the background?

The catchily named Renewable Fuel Standard law requires traditional gas and diesel refiners (ExxonMobil, BP, etc.) to mix a certain amount of ethanol and biodiesel into their products. But, according to Bloomberg Businessweek, refiners can avoid that little nuisance if they instead purchase renewable fuel credits from manufacturers of ethanol or biodiesel. It’s kind of like when your great-great-grandaddy Phineas slipped his buddy Granville a fiver to take his spot in the Civil War. (Srsly, people did that.) Except, in this case, refiners pay a renewable manufacturer so they don’t have to get their own hands messy with cleaner fuel. Hmm. That’s where Philip Rivkin, founder and CEO of Houston-based Green Diesel came in.

What did he do?

According to Bloomberg Businessweek, EPA investigators say that Green Diesel’s production of biodiesel ended in 2008, at which point Rivkin decided to skip the whole, laborious making-renewable-fuel part of the operation and focus exclusively on selling credits to big oil companies. When an EPA inspector paid a visit to Green Diesel, he found rusted canisters where biodiesel was supposed to be mixed, a grand total of zero employees at the factory, and pipes that connected to nothing. Maybe Rivkin was designing a tribute to M.C. Escher? More likely, he realized that the only thing better than making renewable fuels and selling renewable credits is not making renewable fuels and still selling renewable credits.

What did that accomplish?

Let’s just say that, according to Bloomberg Businessweek, Rivkin later left Houston to live in Spain with his wife, his son, a Lamborghini Murcielago and his very own Canadair Challenger jet. And he didn’t make all that dough leading private Pokémon Go training sessions. Rivkin was selling tens of millions of dollars worth of renewable fuel credits to major oil companies, without making any renewable fuel to which those credits were supposed to be tied, the story says.

Why was he able to do that?

My guess is that the EPA saw how good preschoolers are at being honest about whether they already had dessert, and so decided also to use self-reporting of violations as the main method of enforcement. Works every time! Sellers of the credits — known as Renewable Identification Numbers (RIN) — just had to send the EPA spreadsheets of their transactions. As Bloomberg Businessweek put it: “All an unscrupulous biofuel trader really needed in the early RIN years was a talent for Microsoft Excel.” Ok, I know that sounds bad, but you have to admit, that program is glitchy.

What happened next? . . .

Continue reading.

Written by LeisureGuy

29 July 2016 at 3:14 pm

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