Ethanol industry: RFS didn't drive up gas prices
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WASHINGTON, Jan. 8, 2014 - The Renewable Fuel Standard (RFS) did not drive up gasoline prices in 2013, as alleged by ethanol opponents, according to a study commissioned by the Renewable Fuels Association (RFA), an industry group."
RINs are assigned to batches of biofuel and allow EPA to track industry's mandated use of the alternative fuel. RINs may be traded like other commodities.
In the report, Informa analysts created two models showing 2013's gas price increases - one taking account of rising RIN prices and the other ignoring them. The analysis found the credits were not statistically significant enough to explain the jump in gas prices.
“As a result of that, it cannot be concluded that changes in RIN prices cause changes in gasoline prices,” said Scott Richman, senior vice president at Informa.
Instead, the analysis found gas price jumps were directly related to the divergence between domestic and international crude oil prices, said Crystal Carpenter, another analyst who worked on the report.
RFA will be submitting the paper to EPA while the agency grapples with the proposed RFS for 2014, said Bob Dinneenthe organization's president and CEO. EPA issued a proposal in November to lower the RFS requirement for 2014 from the initial congressional mandate of 18.15 gallons of ethanol and biodiesel for blending into gasoline to 15.21 billion gallons.
Asked by a reporter whether he expected to see any movement on the RFS in early 2014, Dinneen said he was doubtful. Still, he said he wouldn't be surprised. “In my business, you always stay open to the possibility that some oil state lawmaker is going to run an amendment,” Dinneen said.
The analysis will likely receive little attention from the oil and gas industry, which accuses the RFS and ethanol interests of driving up gasoline costs. The industry warns it has already hit the “blend wall,” or the level at which adding more ethanol to gasoline would harm some automobile engines. EPA cited the “blend wall” in its case for a reduced Renewable Fuel Standard.
"The thing the government can do is to get a hold of RINs," Klesse said. "RINs are out of control."
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