‘RINsanity’ not contributing to high gas prices — study

Source: Amanda Peterka, E&E reporter • Posted: Thursday, March 28, 2013

Spiking ethanol credit prices are not a significant factor in the cost of gasoline, according to an economic analysis released today by a national ethanol trade group.

The study by Informa Economics, commissioned by the Renewable Fuels Association, found that high credit prices contribute, at a maximum, 2 cents to the price of a gallon of gasoline. On the whole, ethanol usage in gasoline has reduced pump prices by 2 to 4 cents per gallon, according to the analysis.

The study is meant to rebuff claims by oil companies that volatile ethanol credit prices over the last few weeks are contributing to high gas prices for consumers. Traditionally traded at about 3 to 4 cents apiece, the price for credits spiked to more than $1 about two weeks ago and has swung widely since (Greenwire, March 18).

U.S. EPA allows refiners to buy and sell those credits — which are called renewable identification numbers, or “RINs” — to comply with their obligations under the renewable fuel standard. Several analysts blame the “RINsanity” over the last two weeks on the standard, saying oil companies are spooked about having to comply with EPA’s requirement this year that 13.8 billion gallons of ethanol be used in motor fuel.

The study by Informa Economics looked at gas prices since January and concluded that RIN prices “have not been a demonstrable factor in the rise in retail gasoline prices.” It instead blamed high gas prices this year on increased refiner profit margins, planned and unplanned refinery maintenance, global demand and other factors.

“This report puts that silly notion to rest and clearly confirms that RINs are not having any noticeable impact on gasoline prices,” said Bob Dinneen, president and CEO of the Renewable Fuels Association. “In fact, as the Informa analysis plainly shows, increased ethanol use leads to lower — not higher — prices at the pump for American consumers.”

Last week, the American Petroleum Institute released a competing study by NERA Economic Consulting that predicted skyrocketing costs for consumers if the renewable fuel standard is left in place. The study said consumers would see a 30 percent increase in gasoline and a 300 percent increase in diesel costs by 2015 (E&ENews PM, March 20).