Another battle shaping-up between petroleum and renewable fuels this time over RINs, those renewable identification numbers. Under the Renewable Fuels Standard, obligated parties are required to buy renewable fuels, like ethanol, each year. RINs are the way those “obligated parties” show that they have purchased the required amount. There are also third-party companies that will administer RINs for a blender. Because refiners and importers are required to have RINs, they have value; that value will change depending on availability of ethanol.
The issue is the value of those RINs has gone from pennies-per-gallon to $1.00 per gallon in recent weeks. Analysts say that could cost the refining industry billions of dollars this year. A couple of Congressional committees say they are considering possible action. Bill Day with Valero tells POLITICO there are three options for a refiner: sell more gasoline to countries which don’t require RINs, decrease the amount of gasoline refined or pass the increased price on to consumers.
Others charge the price is purposely being driven up by oil companies in an effort to get Congress to modify or dump the Renewable Fuels Standard. Renewable Fuels Association president Bob Dineen says the RINs are being traded among oil companies so in the end it all evens-out. Ethanol supporters say refiners do not need to buy RINs, just use more ethanol.