RFA Chief Says He’s Still Concerned RINs Market Is Being Manipulated

Source: By Jeff Barber, OPIS • Posted: Friday, August 4, 2017

The head of the Renewable Fuels Association (RFA) says the ethanol industry group remains concerned that “market manipulation” is a “significant factor” driving the price of Renewable Identification Numbers (RINs) and cited an unlikely ally in support of his argument — merchant refiner CVR Refining, a longtime critic of the Renewable Fuel Standard.

Testifying at a public hearing Tuesday in Washington on EPA’s proposed 2018 Renewable Volume Obligations, RFA President and CEO Bob Dinneen said his organization continues to be concerned that “market manipulation, not market forces, is a significant factor driving RIN prices today.

“We agree with one independent refiner, who just last week said ‘the continued volatility and extraordinarily high prices of RINs further proves that we are dealing with a manipulated and contrived market.’ ”

In a July 27 conference call to discuss the company’s second-quarter earnings, CVR CEO Jack Lipinski ripped RINs trading, saying that prices for the credits “continue to be an egregious tax on independent merchant refiners and small fuel retailers.” He also reiterated earlier claims that the RINs market is “manipulated.”

EPA, Dinneen said in his Tuesday testimony, “must end RIN price manipulation.”

Dinneen’s comments came exactly a year after he wrote to EPA and the U.S. Commodity Futures Trading Commission to ask the agencies to examine “whether certain parties may be exerting undue influence on [RIN] prices or otherwise engaging in manipulative practices.”

Dinneen told reporters Tuesday that while RFA discussed the issue with CFTC, he does not believe EPA “has followed up” and that “frustrates me no end.”

The CFTC in June told a group of U.S. Democrats that it would not investigate billionaire Carl Icahn’s trades in RINs because a futures market in the credits does not exist. Icahn is the majority owner of CVR Refining, and the senators had expressed concerned that Icahn had used his position as regulatory adviser to President Donald Trump to drive down RIN prices.

CFTC added that it signed a memorandum of understanding with EPA in 2016 under which it would advise EPA on techniques the agency could use to minimize fraud and market abuses in the RINs market.

RIN prices have been especially volatile this year, falling into the mid-40ct range for ethanol (D6) credits in January and February before rebounding recently into the mid- to high-90s. OPIS on Tuesday assessed 2017 D6 RIN prices in an 87ct to 89.5ct range.

Dinneen and others will get their chance this month to make their opinions known to EPA. In releasing its proposed 2018 Renewable Volume Obligations in early July, the agency also asked for industry comment on how the current system for trading Renewable Identification Numbers (RINs) could create opportunities for market manipulation.

In the proposed rule, EPA said “some stakeholders have expressed concerns the current provisions related to RIN trading render the [Renewable Fuel Standard] program vulnerable to market manipulation,” adding that it takes such concerns “seriously.”

While EPA said the RIN system was originally designed “with an open trading market in order to maximize its liquidity and ensure a robust marketplace for RINs,” it now wants to assess “whether and how the current trading structure provides an opportunity for market manipulation” and is seeking comments on “potential changes to the RIN trading system that might help address these concerns.”

– Jeff Barber, jbarber@opisnet.com