RFA: Refineries trading credits to avoid blending ethanol

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Oil companies could be blending more ethanol with gasoline, but use deceptive practices to avoid doing so, according to Bob Dinneen, president of the Renewable Fuels Association. The issue centers around Renewable Identification Numbers (RINs), a type of credit refineries can use to comply with the Renewable Fuels Standard (RFS).

The RFS sets mandatory blend levels for renewable fuels, with the target increasing annually. The RFS for 2013 is 16.55 billion gallons. By 2022, the RFS grows to 36 billion gallons.

According to the Renewable Fuels Association, a RIN is produced when a gallon of renewable fuel is produced. Oil companies can then split the RIN from the gallon when they buy the gallon of renewable fuel and sell it on the open market. Oil companies can either buy a gallon of renewable fuel to comply with the RFS or buy a RIN credit on the open market.

Listen to "The Ethanol Report" podcast for more information about a RIN.

The RIN market in recent weeks has experienced considerable volatility, with prices ranging from 7 cents to over a dollar. Oil refiners claim the cost of RINs is driving up the cost of gasoline, and point to the volatility in RIN prices as a reason to end the RFS.

Dinneen refutes that claim, saying oil companies are purchasing RINs and trading them amongst themselves instead of blending more ethanol. The RIN credits were established to provide flexibility when renewable fuels were short in supply and high in cost, he says, but today there is a surplus stock of ethanol at a price about 70 percent that of gasoline. According to the USDA’s most recent National Weekly Ethanol Summary, ethanol prices currently average around $2.60 per gallon, while the U.S. Energy Information Administration lists a national average gasoline price of $3.70 per gallon.

“We could produce more if refiners were willing to purchase it, and they would save more money,” Dinneen says, adding that volatility in RIN market cannot be explained by market fundamentals. “There is no way the opaque marketplace for RINs is driving up the price of gasoline today.”

Dinneen says oil companies are needlessly and irresponsibly using RIN credits to turn public opinion against the RFS, which he says has been very successful. The RFS, he says, has helped reduce U.S. reliance on foreign oil, lowered gasoline prices for consumers, reinvigorated rural America and spurred innovation in alternative fuels.

For more information about RINs and the ethanol industry, visit the RFA website at EthanolRFA.org.

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VA  |  March, 21, 2013 at 09:19 AM

It is sad to see this kind of propaganda being pushed here. Ethanol is only cheaper for the end-user because of federal subsidies. Farmers also pay more for their grain because so much of it is used to make fuel that people don't want. End subsidies for ethanol now and let the market dictate how much is made. Even Al Gore has seen the light on ethanol now.

Allison Florance    
Utah  |  March, 21, 2013 at 10:26 AM

What would really be nice is to have all of this analysis and information up front and transparent so that we could actually be making intelligent decisions on RF. People are opposed to RF, we just want to be part of the conversation with all the information so that we make smart RF decisions. When you make laws it is only logical that folks try to go around them if it is in their best interests to do so. That should be part of the analysis. Ethanol isn't the answer, yet isn't the complete devil either.

Florida  |  March, 22, 2013 at 05:22 AM

Figures don't lie, but liars figure. My car will get giant growths from the GMO"d corn.


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