Bob Dinneen to WSJ: Stop Spreading Big Oilís Misinformation. RINs are Free!
To the Editor --
RINs are free. I repeat RINs are free. In suggesting that RINs are driving up the price of gasoline (“The Ethanol Tax”, July 19th, Page A4) the WSJ is once again simply regurgitating the misinformation from Big Oil and ignoring the facts; anything to maintain oil’s death grip on its monopoly of the U.S. motor fuel market and consumers’ wallets.
RINs are not raising gas prices because RINs are FREE. RINs (Renewable Identification Numbers) are the compliance mechanism oil companies use to demonstrate they have met their renewable fuel obligation. Refiners receive a free RIN for every gallon of ethanol purchased by a producer. Refiners and gasoline marketers can trade RINs amongst themselves to ease the compliance burden. A thinly traded market is now developing among refiners for these credits, but if refiners believe the price for a RIN offered by their competitor is too high, they could simply use more ethanol and get more free RINs! Indeed, given that ethanol is ~$0.70 cheaper than gasoline today, the sales of E85 and other higher ethanol blends is increasing exponentially.
Recent trends show gasoline prices were falling when RIN prices spiked in March. And gasoline prices have been falling again since early June while RIN prices have continued to escalate. The correlation of RINs to gas prices since Feb. 1 has been -0.3, meaning increasing RIN prices correlate best to decreasing gas prices. Oops.
It is time for refiners to do the right thing. Invest in infrastructure, offer higher level blends, and stop playing financial games in an opaque market in the name of avoidance. A recent poll by Research Now showed 75% of Americans want more renewable fuel options at gas stations and 73% favor the Renewable Fuel Standard. Three in five blame the oil industry for high gas prices. Apparently, consumers are smarter than the WSJ.
President and CEO
Renewable Fuels Association