Weaker RINs Lure Gasoline Shipping into US East Coast Ports: Sources

(Hellenic Shipping News) A decline in the US obligation for biofuels has prompted an increase in imports from Canada and Europe into the Atlantic Coast, according to market sources and federal government data.

The renewable fuels obligation for a gallon of imported gasoline has fallen from 2.29 cents/gal October 3 to 1.74 cents/gal Tuesday night, for a rate of decline of 1.6 points/day.

A smaller RINs obligation is understood to encourage imports, with buyers of imported gasoline on the hook for a smaller overall price tag.

“Definitely the recent drop in RVO has been a contributing factor in the increase in European barrels making their way to the USAC market over the past few weeks,” a US light-ends source said.

The drop in RINs coincided last week with Atlantic Coast imports surmounting 500,000 b/d for the first time in a month. Imports rose 307,000 b/d to 554,000 b/d in the week ending November 2, with the daily average representing about 13 full gasoline cargoes for an entire week.

Import flow also picked up on the need for gasoline along the East Coast because of reduced rates at the region’s largest refinery, Philadelphia Energy Solutions. East Coast refinery runs have been under 80% for six straight weeks through last Friday. That kind of low production last happened in March 2017.

Prices for RINs, which are used to prove compliance with the US Environmental Protection Agency’s biofuel blending requirements, have dropped sharply in 2018. Since reaching 94.5 cents/RIN on October 23, 2017, prices for D6 ethanol RINs have fallen to 7 cents/RIN on Wednesday in early trading. D4 Biodiesel RINs reached $1.0925/RIN on October 25, 2017, and were valued between 35 and 38 cents on Wednesday in early trading.

RINs markets have been pummeled by two years of political squabbles between oil refining supporters and biofuels supporters in Congress. Refining interests have complained that high RIN prices were a financial burden and called for reform of the nation’s biofuels policy. On the other hand, biofuels proponents said that refiners passed on the financial impact of RINs to consumers, and that RINs were necessary to encourage growth of the domestic biofuels industry. READ MORE

Excerpt from Farm Forum: RINs provide the financial backing needed to incentivize drivers to purchase E15 and E85 blends. However, a second SRE study found that these exemptions have led to a decline in the price of RINs. If SREs continue to drive down RIN prices, it could eliminate the incentive to consume higher ethanol blends above the E10 blend wall and significantly reduce demand for E15 and E85.

Put simply, SREs have not stifled ethanol demand for E10 but could contribute to a decrease in demand for E15 and E85 in the future. Still, SREs are not the real problem. The larger issue is that the RFS program is no longer driving demand for ethanol and becomes less sustainable with each new short-term fix that’s implemented. It is time for industry stakeholders to admit that the RFS is no longer the best avenue to boost domestic fuel markets and our current approach to RFS reform is failing. Instead, the oil and biofuel industries must come together and work with members of Congress to produce a viable long-term solution that improves market viability and benefits all stakeholders involved. READ MORE