Grassley Asks EPA if Ethanol Credit Market Is Being Controlled by Wall Street
by Christopher Doering (Des Moines Register) As controversy swells over the cost of special credits tied to ethanol, Iowa Sen. Chuck Grassley asked the agency charged with overseeing the country’s renewable policy for details on what is being done to prevent manipulation and abuse.
Grassley, in a letter sent Wednesday to Environmental Protection Agency Administrator Gina McCarthy, expressed concern that not enough is known about the role speculators play in the market for credits known as Renewable Identification Numbers, or RINs.
But there has been concern that the credits, originally seen as a way for refiners and others tied to ethanol to comply with the mandate, have been used as an investment tool for big banks on Wall Street, helping to inflate the cost of the RINs. The fear is that the higher RIN prices have made it more expensive to produce motor fuel with ethanol, costs the oil industry says have then been passed on to consumers at the pump. …
“The EPA needs to provide assurances that this market is functioning for its intended purpose, rather than acting as a profit mechanism for Wall Street banks and other financial institutions,” Grassley said in the letter sent Wednesday.
Grassley asked the EPA head nine questions, including what safeguards the agency has in place to protect against RIN market manipulation and abuse by those not directly involved in renewable energy. He also asked McCarthy whether the EPA is working to modify the RIN credit market to eliminate manipulation and abusive trading practices such as hoarding, and whether the agency has considered measures like daily prices movements and restricting the number of credits an entity may hold to reduce volatility. READ MORE READ LETTER and MORE (DomesticFuel.com)