Ethanol group Renewable Fuels Association Wednesday released an Informa Economics analysis of the Renewable Fuels Standard and its associated RIN credits, finding the policy has not been a factor in rising gasoline prices, despite rising RIN costs.
The RINs – identifying numbers that renewable fuel producers and importers generate based on the volume of compliant renewable fuel that they make available – can be traded and used by petroleum refiners and importers to show compliance with volume obligations.
Though competing arguments have been made about what's causing the higher gas prices, one thing is certain –RIN prices have risen sharply over the last few months. Scott Irwin and Darrel Good of the University of Illinois FarmDoc program cite Oil Price Information Service data showing prices of D6 RINs peaking at $.90 earlier this month, up from less than 10 cents late last year.
Some groups say the rise is because of a forthcoming "blend wall" – a cap on the amount of ethanol that can be blended into traditional fuels, thereby making mandated ethanol production higher than what is needed in the marketplace. In turn, because of compliance concerns, that cap is boosting RIN demand and driving prices higher.
And, higher RIN prices bring higher refining costs, the American Petroleum Institute says. The group's own study, prepared by NERA Economic Consulting and released last week, pointed out the findings: for every dollar spent per gallon on the RINs market, the cost of making E10 gasoline rises 10 cents.
"Ethanol and other renewable fuels have an important role to play in increasing America's energy security, and are an important piece of our transportation fuel mix," said Bob Greco, API downstream group director. "But the federal RFS mandate is ill-conceived and continues to be inflexible."