Bloomberg News

Study Shows RINs Not Factor in Higher Gasoline, Fuel Group Says

March 27, 2013

A surge in the value of Renewable Identification Numbers for ethanol compliance isn’t one of the reasons for higher gasoline retail prices, the Renewable Fuels Association said, citing a study by Informa Economics Inc.

The value of RINs, which are used by refiners and the Environmental Protection Agency to determine compliance with government biofuel mandates, reached a record $1.06 on March 8 for the corn-based variety, compared with 7.1 cents Jan. 7, data compiled by Bloomberg show.

Biofuel proponents and oil industry interests differ over the impact of the higher RINs values and their effect on gasoline prices. The American Petroleum Institute says that a U.S. law requiring increasing amounts of ethanol in a shrinking gasoline pool is behind the rise and that the mandate should be repealed.

“A fact-based review of developments in the gasoline, ethanol and Renewable Identification Number markets indicates that the Renewable Fuels Standard in general and RINs in particular have not been a demonstrable factor in the rise in retail gasoline prices that has occurred in early 2013,” Informa said in the report, commissioned by the ethanol lobby.

RINs for conventional grain-based ethanol rose 9.9 percent to 66.5 cents yesterday, data compiled by Bloomberg show. Advanced RINs, which cover biodiesel and Brazilian sugarcane- based ethanol, climbed 2.7 percent to 75 cents.

Federal Mandate

A 2007 energy law requires the U.S. to use 13.8 billion gallons of ethanol this year and 14.4 billion next year. Each gallon of ethanol produced is assigned a RIN, and once refiners blend the biofuel with gasoline they can either retain the certificate to show compliance or they can trade it.

The effect of RINs on gasoline retail prices is 0.0004 cent a gallon and when adjusted to reflect ethanol’s discount to gasoline, consumers are receiving just under a 0.04 cent per gallon benefit at the pump, Scott Richman, senior vice president at Informa, based in Memphis, Tennessee, said today on a conference call with reporters.

U.S. Senator Ron Wyden, an Oregon Democrat and chair of the Senate’s Energy and Natural Resources Committee, sent a letter to the EPA on March 22 asking for data to explain the recent volatility in the RIN market.

“We would absolutely support more visibility and more transparency into this market,” Geoff Cooper, vice president of research and analysis at the Renewable Fuels Association, a Washington-based trade group, said on the call.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net


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