Prices of renewable fuel credits, known as RINs, which surged in early 2013, did not have any impact on gasoline prices, according to an analysis commissioned by an ethanol trade group released Tuesday.
The study, conducted by commodities market analysis firm Informa Economics for the Renewable Fuels Association, found that retail gasoline prices were driven primarily by movements in crude oil prices, along with seasonal gasoline demand.
"Although retail gasoline prices and RIN prices both increased in early 2013 and remained elevated (though volatile) during the middle of the year, this was mainly coincidental, and upon closer examination it can be determined that these changes generally occurred for different reasons," the report stated. "Based on statistical analysis, it can be concluded that changes in RIN prices did not 'cause' the changes in retail gasoline prices in 2013."
RINs, short for Renewable Identification Numbers, are credits generated by the production of biofuels and are used to demonstrate refiners' compliance with the blending requirements in the Renewable Fuel Standard.
The credits, which can be traded on the open market, drew attention on Capitol Hill after their prices soared for much of 2013, which traders have attributed to concerns about the E10 blend wall, the point at which rising ethanol mandates under the RFS hit 10% of the US gasoline pool.
The oil industry has urged Congress to repeal the RFS, saying the spike in RINs prices would result in pain at the pump for consumers, given the inability of current US fueling infrastructure to absorb blends of more than 10% ethanol.
RINs prices later dropped in the fall after indications the EPA would lower the ethanol blending mandate for 2014 below the blend wall. The EPA has proposed a 2014 biofuels mandate of 15.21 billion gallons, a significant cut of 1.34 billion gallons from the 2013 RFS.
Ethanol RINs were last heard in a bid-offer range of 33-34 cents/RIN on Tuesday.
Bob Dinneen, RFA's president and CEO, said the analysis shows that oil companies' rhetoric is not true. He said the only refiners that have to buy RINs on the open market are those who refuse to blend biofuels into their product.
"In the highly competitive gasoline marketplace, there is no way they can pass those costs on to consumers and remain competitive with refiners and blenders who are blending more ethanol than required," Dinneen said. "The market is essentially a closed loop, with some participants incurring costs and others reaping profits. In the end, it's a zero sum game, and the price a consumer pays for gasoline is unaffected."
