Biofuel Blending Rules Won’t Raise Gas Prices | Commentary
by Brent Erickson (Roll Call/Biotechnology Industry Organization) … What’s really behind this year’s rapid rise in the price of RINs? And will their cost be passed to consumers at the pump?
A simple exercise in following the money shows that it’s the refiners’ own failure to adequately plan for compliance that caused the run-up in RIN prices. In spite of that, consumers will actually benefit from competition in the fuel market under the RFS.
The truth of the matter is that some refiners have chosen not to blend biofuels and instead try to pay their way out of the RFS obligation. They then cry that they are being “taxed.” But while these refiners look only to comply with the letter of the law, other refiners have a better business model; they have invested in the future by blending high volumes of biofuel and are consequently generating revenue. They and consumers are profiting from their foresight.
The “blend wall” isn’t to blame. The blend wall is nothing more than a trade barrier established by market incumbents to block competition. In some areas of the country, retailers offer biofuel blends above 10 percent at a lower price to consumers. There are many potential ways to use additional volumes of biofuels in U.S. transportation to reduce our reliance on foreign oil and lower fuel prices.
The cost of RINs has not shown up in the price consumers pay at the pump, and it likely never will. While many of the refiners have threatened to pass the cost along, they are prevented by competitive pressure. Other refiners are not making consumers pay, instead absorbing the costs in their bottom lines. Further, the refiners who blend biofuels could pass their profits from RIN trading to consumers — along with the lower cost of the renewable fuels. READ MORE