RFS not leading to higher gasoline prices, analysis says

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, March 27, 2013 - Despite claims otherwise by the oil industry, the Renewable Fuel Standard (RFS) and its RIN credits have not been a factor in the recent increase in gasoline prices, according to an analysis released today by the Renewable Fuels Association (RFA).

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The analysis, conducted independently by Informa Economics found that ethanol costs are significantly less than gasoline at the wholesale level and that ethanol is reducing pump prices for consumers across the country.

“A fact-based review of developments in the gasoline, ethanol and RIN [Renewable Identification Number] markets indicates that the RFS in general and RINs in particular have not been a demonstrable factor in the rise in retail gasoline prices that has occurred in early 2013,” the report said.

As part of the RFS, oil companies buy RINs from ethanol producers for credits to meet the law's requirements. RINs track each gallon of ethanol produced, and companies can either buy the fuel or a RIN credit to comply with RFS.

Recently, the oil industry made claims that ethanol has added up to 10 cents per gallon to the price of gasoline. That assertion, along with the media attention it brought, has prompted RFA to hold a number of press events to debunk those claims.

“Not surprisingly, opponents of the RFS have absurdly suggested RINs are a reason for this spring's higher gas prices,” said RFA President Bob Dinneen. “This report puts that silly notion to rest and clearly confirms that RINs are not having any noticeable impact on gasoline prices. In fact, as the Informa analysis plainly shows, increased ethanol use leads to lower-not higher-prices at the pump for American consumers.”

The analysis found RINs are likely contributing no more than four-tenths of one cent to the retail price of a gallon of gasoline. Meanwhile, ethanol's wholesale discount to gasoline in 2013 has reduced the pump price for blended gasoline by an average of $0.044 per gallon.

“Considering both the ethanol price advantage and the direct cost of RIN prices, the net benefit to consumers from the usage of ethanol is $0.04 per gallon of gasoline,” the report found.


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