Icahn’t Believe It’s an Ethics Conflict

Democrats lambaste Carl Icahn for agreeing with them.

 
 

Carl Icahn

 
Carl Icahn PHOTO: BRENDAN MCDERMID/REUTERS

There are ethics complications aplenty in the Trump Administration, which makes it strange that Democrats and the media are inventing phony ones. The other irony is that the same people assailing billionaire investor Carl Icahn for conflicts of interest tend to share his underlying policy positions.

President Trump named his friend Mr. Icahn as a special outside adviser for deregulation, and the businessman has become a roving critic of anti-growth or incoherent rules. One of his better targets is the Environmental Protection Agency’s ethanol mandate, though liberals claim he is self-dealing because a company he owns would benefit from reform.

Mr. Icahn is the majority owner of the Texas oil merchant refining outfit CVR Energy ,which like all refiners and importers must comply with the EPA’s quotas for blending ethanol into gasoline. These are enforced with a dysfunctional trading system called Renewable Identification Numbers, or RINs, that stand in for gallons of ethanol consumed at the pump. 

RINs prices have surged more than 5000% since 2005 and now trade at about 20 times what a gallon of ethanol is worth. The reason is that the EPA mandates more ethanol than that the gas supply can realistically accommodate, and thus valid RINs are artificially scarce. CVR would gain from rationalizing these distortions, but then so would the larger economy and the consumers who are harmed by higher fuel bills.

Senate Democrats say Mr. Icahn is running a secret inside job. In a February letter to the White House counsel and the Office of Government Ethics and then a follow-up this week, seven Democrats claim he has “taken the first opportunity to leverage his newfound political power for his own personal gain.” The signatories include Elizabeth Warren of Massachusetts, Debbie Stabenow of Michigan and Sherrod Brown of Ohio.

On the ethical merits, this is frivolous. Mr. Icahn is giving Mr. Trump his opinion as a private citizen, not as a government policy-making employee with political power. His views on RINs predate the President’s election and have been vented in a op-ed in these pages disclosing his business interests in the policy.

Mr. Icahn also happens to believe that the RINs market is rigged to generate “windfall profits” for “Wall Street, Big Oil and large gas-station chains” at the expense of small and medium refiners like CVR, as he wrote in the Journal. The system is “full of manipulation, speculation and fraud,” he added. Hmmm. This sounds familiar.

In a 2013 letter to the Commodity Futures Trading Commission (CFTC), Ms. Stabenow observed that “factors other than supply and demand have been causing extraordinary volatility in the price of RINs.” She feared that “a lack of transparency in these markets has made them more susceptible to manipulation. If this is the case, it is a problem that must be identified and fixed.”

As recently as a letter last year, Ms. Warren also warned the CFTC about “the risks of speculation” that “can drive up the price of oil and gas for consumers.” And Mr. Brown and other signatories joined a 2012 letter lambasting “excessive speculation in America’s oil and gasoline markets” and told the CFTC to root out “fraud, abuse, and manipulation.”

Democrats can’t blame Mr. Icahn for passing along their own opinions. Meanwhile, reform is overdue at the EPA, and Mr. Icahn is doing a public service by exposing the agency’s RINs extortion racket.

Appeared in the Apr. 01, 2017, print edition.

https://www.wsj.com/articles/icahnt-believe-its-an-ethics-conflict-1491000591

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