850 N 4TH AVE. * WALLA WALLA, WA  99362
Walla Walla Office (509) 525-6510
Dayton Office (509) 382-2571
FAX (509) 529-6050

Office Hours: 7:30am to 12:00pm and 1:00pm to 4:30pm

 

Phone: 800-994-4290 Thursday, October 19, 2017
 
Home
Northwest Grain Growers
My Account
Admin Login
  
- DTN Headline News
Study: Gas Price Rise Not Due to RINs
Tuesday, October 17, 2017 11:16AM CDT
By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- The prices of renewable identification numbers, or RINs, have not caused increases in gasoline prices from 2013 to 2017, according to a new Informa Agribusiness Consulting study funded by the Renewable Fuels Association.

In recent years, oil industry groups such as the American Petroleum Institute have claimed rising gasoline prices were a result of compliance with the Renewable Fuel Standard -- more precisely when it comes to the cost of buying biofuel credits.

Instead, the report released on Monday said prices at the pump have been driven by movements in crude oil prices, changes in the spread between domestic and international crude prices, and seasonal demand.

The U.S. Environmental Protection Agency is taking heat from biofuels groups, federal lawmakers and others for proposed changes to the RFS. Proposed changes reportedly include attaching RINs to exported biofuel gallons. The biofuels industry has expressed concern the change essentially would flood the market with RINs and drive down prices of the credits. In addition, the EPA recently proposed further reductions to RFS volumes for 2018.

"EPA seems to be on a mission to lower the price of RINs," RFA President and CEO Bob Dinneen said in a statement about the Informa analysis.

"The agency's proposed 2018 RFS renewable volume obligations, which for the first time lowered the total RFS volumes from the previous year, a subsequent notice of data availability proposing to lower the RFS further to reflect anticipated reductions in imported biodiesel, and rumors of an impending proposal to allow exported biofuel to qualify for the domestic program, all would have the effect of lowering the price of RINs. But this analysis demonstrates that EPA's efforts will have no impact on consumer gasoline prices."

Dinneen said the oil industry "needs to stop scapegoating the RFS and ethanol. The RFS is helping to bring the cleanest, lowest-cost and highest-octane fuel to consumers, and no amount of obfuscation can dispute that fact."

Sen. Charles Grassley, R-Iowa, and other lawmakers are scheduled to meet with EPA Administrator Scott Pruitt on Tuesday to talk about the recent RFS developments.

The new Informa analysis said the rise and fall in gasoline prices has been connected to the crude oil markets for years, long before the first RFS in 2005.

"It should be remembered that RINs were created only in the aftermath of the establishment of the Renewable Fuel Standard in 2005, and the differentiation of RINs by biofuel category did not take effect until 2010, whereas gasoline prices have been volatile for decades," the report said.

"The primary driver of retail gasoline prices is crude oil prices, as crude oil is the primary input to gasoline production. Historically, the running 24-month correlation between crude oil and retail gasoline prices has generally been between 0.80 and 0.99, which indicates a very strong relationship, given that a coefficient of 1.00 would indicate perfect positive correlation."

The analysis also said a "majority of the movement in gasoline prices" can be attributed to changes in crude oil prices.

On March 27, 2013, farm doc at the University of Illinois at Urbana-Champaign published a study, "High Gasoline and Ethanol RINs Prices: Is There a Connection?"

Farm doc said it was difficult to "nail down precisely" how or if high RIN prices affect retail gasoline prices.

"This situation does not mean we are left totally in the dark about the possible impact of rising RINs prices," farm doc said.

The study found that the price of CBOB gasoline at Chicago "generally declined" in the final three months of 2012. Then it began to move higher in late December, "prior to the start of the rally in D6 RINs prices."

Then, RIN prices started to rise in January 2013, peaked in early March, and then "declined modestly." Farm doc said the timing of the increase in CBOB gasoline prices "predates the increase in RINs prices by several weeks, which casts doubt on RINs prices as a significant driver of gasoline blendstock prices."

The analysis found CBOB prices were lower in late March than in October, "further suggesting that factors other than RINs prices dominated CBOB prices."

Farm doc found those companies that "must routinely buy RINs to meet their RVO are financially disadvantaged and have a clear incentive to pass along the higher prices in the supply chain to the degree it is feasible."

Read the new Informa analysis here: http://bit.ly/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(AG/ES)


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Friday, October 6, 2017 12:52PM CDT
Monday, October 2, 2017 11:08AM CDT
Friday, September 29, 2017 12:23PM CDT
Technically Speaking
Darin Newsom
DTN Senior Analyst
Sunday, October 15, 2017 6:00PM CDT
Sunday, October 15, 2017 5:56PM CDT
Sunday, October 15, 2017 5:54PM CDT
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Tuesday, October 17, 2017 12:59PM CDT
Wednesday, October 11, 2017 10:44AM CDT
Friday, October 6, 2017 8:22AM CDT
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Wednesday, October 18, 2017 12:29PM CDT
Wednesday, October 18, 2017 8:57AM CDT
Tuesday, October 17, 2017 4:17PM CDT
Minding Ag's Business
Marcia Taylor
DTN Executive Editor
Friday, October 13, 2017 6:52PM CDT
Thursday, October 5, 2017 6:35AM CDT
Thursday, September 21, 2017 11:43AM CDT
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Tuesday, October 17, 2017 2:19PM CDT
Friday, October 13, 2017 1:26PM CDT
Wednesday, October 11, 2017 7:10PM CDT
DTN Production Blog
Pam Smith
Crops Technology Editor
Wednesday, October 18, 2017 9:57AM CDT
Monday, September 18, 2017 6:14PM CDT
Friday, September 8, 2017 7:52PM CDT
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Friday, October 6, 2017 1:28PM CDT
Friday, September 22, 2017 3:23PM CDT
Friday, September 1, 2017 3:27PM CDT
South America Calling
Alastair Stewart
South America Correspondent
Tuesday, October 17, 2017 1:12PM CDT
Thursday, August 24, 2017 11:32AM CDT
Wednesday, August 23, 2017 2:50PM CDT
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Friday, October 13, 2017 6:36PM CDT
Thursday, October 5, 2017 6:56PM CDT
Tuesday, September 26, 2017 10:25AM CDT
Machinery Chatter
Jim Patrico
Progressive Farmer Senior Editor
Wednesday, October 18, 2017 11:13AM CDT
Wednesday, October 11, 2017 2:06PM CDT
Monday, October 2, 2017 1:39PM CDT
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Wednesday, October 18, 2017 4:34PM CDT
Tuesday, October 17, 2017 4:25PM CDT
Monday, October 16, 2017 4:11PM CDT
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Tuesday, September 26, 2017 8:30AM CDT
Tuesday, August 29, 2017 4:45PM CDT
Friday, August 18, 2017 11:33AM CDT
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN