Posted on: March 12, 2013 in E15, Ethanol

Once again, despite the facts, the Wall Street Journal sides with Big Oil and its monopoly against ethanol, Big Oil’s direct competitor. This time the issue is about the purchase of special credits called RINs and Big Oil’s latest scapegoat for higher gasoline prices.

Ethanol costs $0.75 per gallon less than gasoline, thus adding more ethanol would reduce consumer costs. But oil companies are refusing to move to higher ethanol gasoline blends. In other words, they’ve gone on strike. The RIN program was designed to meet any shortages of renewable fuels, not to allow oil companies to avoid blending ethanol with gasoline. Now, oil companies have simply bid up the price of RIN’s instead of buying ethanol.

There is no shortage of ethanol in the marketplace today. Ethanol stocks are high while production capacity utilization is down at the unusually low rate of 85 percent. Further, a number of ethanol plants are not operating because of Big Oil’s refusal to blend more ethanol. Much of the idle capacity could be brought back online quickly if oil companies chose to meet RFS obligations with E85 and mid-level blends rather than stockpiled RINs.

Big Oil’s manipulation of the system is preventing competition in the fuels marketplace, an activity that should be anathema in any free, competitive market. If this were happening in any other industry, the Journal would probably be jeering, not cheering, the wanna-be monopolists.

Bob Dinneen

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