$186 million – value of the White House biofuel credit controversy

Carl Icahn’s oil refining company CVR Energy made a massive bet in 2016 that prices for US government biofuels credits would fall, shortly before he became an advisor to President Donald Trump on regulations driving the market, according to Reuters.

The US’ biofuels credit system is meant to encourage the mixing of renewable fuels such as ethanol into gasoline or diesel. Credits are awarded by the government to firms that produce those blends, while those that don’t, such as CVR, are obliged to buy the credits from their competitors.

According to Reuters’ review of CVR fillings with the Securities and Exchange Commission and interviews with two brokers, CVR delayed buying the necessary biofuels credits in 2016 and instead sold millions of them. At the time it seemed an illogical move, one which would only pay off if it could buy the credits it needed at lower prices later on.

In December the plan seemed to start to work. Prices for biofuels credits fell in events connected to Trump’s election victory, among those Icahn’s appointment as a special advisor on regulatory issues. In February the price of biofuels credits fell again following policy changes proposed by Icahn.

According to the Reuters article, it’s now been revealed that this gamble involved $186 million worth of biofuel credits.