Fuels America Holds Call to Discuss New EPA Memo on RIN Prices
by Erin Voegele (Ethanol Producer Magazine) On June 11, Fuels America hosted a conference call to discuss a memo from the U.S. EPA that demonstrates the renewable fuel standard (RFS) does not increase—and, in fact, works to decrease—retail gas prices.
Geoff Cooper, senior vice president of the Renewable Fuels Association, noted that although a press call wouldn’t normally be called to discuss a technical memo, the biofuel trade groups though the memo was significant enough to address.
Cooper explained that the messenger in this case is just as important as the message. “It’s isn’t what’s being said in the EPA memo that’s so significant here,” he said. “It’s who is saying it.”
During his presentation, Cooper outlined some key components of the memo. Most striking, he said the EPA did not see and doesn’t expect to see any changes in retail prices for transportation fuels across the entire fuel pool as a result of any fluctuations in RIN prices. He noted that is something the RFA and Growth Energy have been arguing for nearly three years.
According to Cooper, the EPA says the reason there is no impact is the RIN is not an additional cost to the consumer. Rather, it’s really just a transfer payment between parties that are blending renewable fuels and obligated parties who are producing petroleum-based fuels.
Another key finding in the memo, Cooper said, is that when a detached RIN is transacted, it generates revenue for the RIN sellers. It may be looked as a cost to the RIN buyer, but there is no impact for the buyer of the finished fuel at the pump.
Cooper said the EPA sent a lot of time in the memo discussing how RIN prices can transform the gasoline marketplace. “They talk about how a higher RIN price is actually expected to result in a significant decrease in the price for E85, and clearly we’ve seen real world evidence of this happening in places like Iowa and Minnesota, but also even in places like Florida and Texas,” Cooper continued, noting the memo addresses some real-world observations and explains this behavior. “Essentially what you have happening is when a marketer or blender buys ethanol with a RIN attached, and they blend it with a little bit of hydrocarbon to make E85, they separate some of that RIN, and that’s a nice profit for them, and they pass some of that revenue onto the consumer in the form of a lower E85 price. Clearly, that’s how the RIN program was designed to work, we have evidence that it was working that way.” READ MORE