Did This Billionaire Game Ethanol Markets for a $50 Million Windfall?

It hasn't exactly been a secret that billionaire investor Carl Icahn holds contempt for renewable fuels. His companies, CVR Energy and CVR Refining, have often blamed government rules for eating into profits. Fuel blenders are required to submit to the U.S. Environmental Protection Agency special compliance credits, called renewable identification numbers, or RINs, to show that mandated volumes of renewable fuels are being blended into the nation's gasoline supply. If a blender's gasoline volume does not contain the required percentage of biofuels, it can buy RINs from blenders that have excess credits. But a weird thing began happening in late 2016.CVR Energy and CVR Refining began putting off purchases of RINs in the months leading up to and following the general election in November. In fact, the company began selling millions of them. In effect, the company was betting that the prices of the compliance credits, which are traded freely on the open market, would drop in the future. Icahn was essentially shorting RINs.There's nothing wrong with that. However, a group of eight senators has pointed out that the unusual trading activity of CVR Refining and Icahn resulted in a $50 million profit -- an "impossible" "rare profit" -- and have requested an investigation into possible insider trading. Did the billionaire game renewable fuels markets for his own gain? The compliance credits are traded on the open market, which keeps ethanol producers from flooding the market with ethanol and allows refiners a chance to buy low and sell high (if they choose).So, CVR Refining wasn't doing anything illegal in the last year by simply not buying RINs or reselling RINs.But here's the potential problem: Carl Icahn was advising President Donald Trump -- first unofficially during the presidential campaign and then, beginning in late December, as a special advisor -- on matters involving the EPA and deregulation while making these market trades. In other words, there may have been a conflict of interest that essentially amounted to insider trading.For instance, Icahn was a strong supporter of nominating Scott Pruitt to head the EPA. Pruitt was a strong critic of the RFS -- and now leads the agency. RIN prices fell 20% immediately following his nomination. CVR Energy and CVR Refining stocks hit 52-week highs.