EPA finds oil companies recoup biofuel blending costs

EPA finds oil companies recoup biofuel blending costs

EPA analysis puts the lie to big oil's RIN credit claims. Credits used to ensure oil companies complying with Renewable Fuels Standard.

The recent release of an EPA memo has stoked the frustration level of ethanol backers long at odds with ‘big oil’ and the agency’s approach to biofuels. Never fans of the agency, biofuel advocates were very upset with the EPA’s May 29 proposal to chop ethanol requirements more than expected.

The memo will only strengthen views that the EPA’s handling of biofuels is unjust. Its unveiling also comes just prior to a Senate committee hearing where EPA officials are expected to explain its oversight of the Renewable Fuel Standards (RFS) program.

The memo focuses on the 2013 price spike of Renewable Identification Number (RIN) credits. The RIN credits are used by oil companies to prove they are in compliance with the blending mandates.

In defending its reticence to blend ethanol with gasoline – something Congress has mandated through the RFS -- oil companies have pointed at the RIN prices as having driven up consumers’ prices at the pump. The EPA memo’s analysis finds such claims are false and, instead, shows oil companies recover the costs of working under RFS regulations.

The EPA memo “confirmed yet again something we’d all confirmed before: RIN prices didn’t, and don’t, have an impact on retail gas prices,” said Tom Buis, CEO of Growth Energy, during a Thursday (June 11) press call. “We call on EPA to go back to the drawing board and change this proposed rule, which we feel is misguided.”

Buis offered four talking points:

•        RIN prices had no impact on retail gas prices in 2013, when they reached their highest point.

•        Ethanol helps the American consumer and economy, providing a less expensive and cleaner fuel.

•        The RFS helps consumers at the pump, holding down prices.

•        The RFS has strengthened America’s national security, energy security, provided jobs that can’t be outsourced, and has reduced pollution.

“The proposal by EPA certainly doesn’t go forward as called for in the RFS,” continued Buis. “A lot of hullabaloo we’ve heard through the years – ‘It’ll drive up RIN prices through the roof and raise consumers’ (fuel) prices!’ – was just rhetoric by those parties who don’t want to live up to their obligations under the RFS.”

Why is this important?

“It’s important because by failing to implement the statute – which requires 15 million gallons corn-derived ethanol in 2016 – the EPA is systematically destructing the RIN credit market and discouraging investment in new technology and infrastructure that would break the blend,” said Bob Dineen, CEO of the Renewable Fuels Association. “This, despite their own analysis that higher RIN prices don’t hurt consumers. Why are they doing it? It makes no sense. They’re only helping the oil companies by doing this.”

Dineen accused the EPA of “manipulating the RIN market, artificially creating a surplus of RINs in the marketplace, devaluing that market and ripping the guts out of the program by removing any incentive to invest in infrastructure or new technologies.”

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