RIN Price Spikes sustaining the "Pain at the Pump" for Gasoline

Posted by Ed Burke on May 30, 2013 8:57:00 AM

I wrote an article for Oil & Energy Magazine regarding RIN values and their impact on gasoline prices - Good time for a look over, as we officially head into "driving season"...

A quick recap - per the EPA RFS Standards, each gallon of biofuel in the US is assigned a RIN number and tracked to ensure that refiners are hitting their mandated renewable fuel allocations. If a refiner doesn't meet their obligation through physical blending of gallons, they can buy RINs to meet the obligation. Since gasoline is now 10% ethanol, and ethanol is a biofuel under RFS this means there is an obligation essentially to produce or purchase RINs to offset 10% of a refiners gasoline gallons.

Historically, both D5 (Biodiesel) and D6 (Corn-Based Ethanol) RINs have traded around or under the 10 cent level (D6 average for 2012-2013 was 11 cents) but this year has seen unprecedented spikes in price, with D6 (ethanol) RINs were trading between 80 and 90 cents as we headed into Memorial Day Weekend.

What does that mean?

Since gasoline is now 10% ethanol, that means that for every gallon of E-10 gasoline sold, there is essentially a 9 cent increase to the price at the wholesale level today. (10% of each gallon, so 10% of 90 cents)

If you are refining or importing gasoline and are subject to purchasing RINs, this obviously has a huge impact on you, as well as the customers you pass it on to. This is an issue in the East Coast as well, where a large percentage of gasoline is imported from Europe and therefore hit with the RIN impact.

The difficulty with the RIN situation as it stands now, is the E-10 blendwall. Refiners are reluctant to blend more ethanol in (and thus decrease their RIN liability) because there is some evidence that higher blends can damage end user vehicles, and additionally, there is little demand for higher level blends. This serves to drive up the market price of RINs

Given the price impact and the current supply situation on gasoline, especially on the East Coast  - the pain you are feeling at the pump is unlikely to subside unless there are revisions to the RFS Standard

You can read the article I wrote on RINs and the Ethanol Blend Wall in PDF form by clicking here

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Topics: Oil & Energy Magazine, RIN values, RINs

Let’s Get Blogging

Posted by Ed Burke on Jan 2, 2011 6:38:00 AM

As we start 2011, God Bless America!

Here are a few 2010 issues I’d like to discuss and get some industry input.

The Massachusetts Biodiesel Mandate, will we see any progress this year?

The Biodiesel Tax Credit is back and RINS values are soaring, does this play a role for Massachusetts?

Moving toward reducing America’s dependence on foreign oil, will solar power and electric cars become more accessible?

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Topics: Biodiesel Massachusetts, massachusetts biodiesel mandate, Biodiesel Tax Credit, Biodiesel, Solar Power, RIN values

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