API, senators separately urge EPA to address rising RIN prices

The American Petroleum Institute and two Republican US senators separately asked the Environmental Protection Agency to address renewable identification number (RIN) costs, which have jumped by 1,400% since the beginning of 2012.

API’s request came as it released a NERA Economic Consulting Study that concluded that the federal Renewable Fuel Standard, under which refiners are required to buy RINs to help them meet cellulosic ethanol requirements, is irretrievably broken and poised to seriously harm consumers, the US economy, and the nation’s fuel supply system.

“The study found that by 2015, the economic consequences of continued implementation of the RFS would be severe,” API Downstream Group Director Bob Greco told reporters during a Mar. 20 teleconference.

He said these could include an almost $800 billion decrease in US gross domestic product, a $580 billion decrease in take-home pay for American workers, a 300% increase in the cost of manufacturing diesel fuel, a 30% rise in the cost of gasoline (which could result in rationing and other transportation disruptions), and the unintended consequence of encouraging refined product exports to comply with the law.

API will continue to press Congress to fully repeal the RFS, Greco said. Immediately, it will urge EPA to reduce the total renewable fuels volume requirement and waive the cellulosic ethanol requirement for 2013, he indicated.

Prices already high

Meanwhile, US Sens. David Vitter (R-La.) and Lisa Murkowski (R-Alas.)—in a Mar. 20 letter to Gina McCarthy, acting administrator for air and radiation at EPA—noted that already high US gasoline prices are ready to climb further as RINs that cost 5¢ each at the end of 2012 now cost as much as $1.10 each.

“Reports cited several reasons for the rapid price increase, including declining gasoline demand, the ethanol ‘blend wall,’ unrealistic RFS mandates, and recent instances of fraud in the RIN market which increased uncertainty among obligated parties,” said Vitter, the ranking minority member of the Environment and Public Works Committee, and Murkowski, who holds the same position on the Energy and Natural Resources Committee.

“These reports also make clear that, as RIN prices continue to climb, refiners will be forced to pass along the increased costs to consumers, export more product overseas, or lower refinery utilization rates,” they told McCarthy.

EPA will need to act decisively to avoid these and other negative consequences, Vitter and Murkowski maintained. “Accordingly, we ask that you utilize any and all existing regulatory authority and flexibility to address the issue of rising RIN costs and alleviate the threat of increased consumer fuel costs,” their letter said.

“Rising RIN costs have increased refiner costs,” said Greco. “For every dollar spent per gallon of ethanol on the RINs market, the cost of making E10 gasoline rises 10¢. The rising costs of RINs are putting enormous pressure on refineries, and—consequently—could put upward pressure on fuel prices.”

Growing problems

NERA’s study also found that as RFS compliance volume requirements increase, so does the challenge of meeting them, he continued. “NERA predicts that eventually many refiners won’t be able to get the RIN credits they need because the credits are finite,” Greco said.

“At that point, according to NERA, they have no effective options and will be forced to reduce their biofuel obligation either by decreasing fuel production—with diesel fuel impacted first—or by exporting fuel, since exported gasoline and diesel aren’t subject to the RFS,” he indicated.

Greco said Congress is increasingly hearing about problems with the RFS not just from the oil industry, but agriculture and food groups. “We may see some bills introduced,” he said. “Congress needs to have this debate as soon as possible.”

“The mandate is continuing to increase,” Greco warned. “Very soon—if not this year, then next year—we’ll pass the blend wall and no longer be able to blend ethanol up to 10%.”

Contact Nick Snow at nicks@pennwell.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

SIBUR plans MTBE expansion at Togliattikauchuk

07/01/2015 Russian conglomerate OAO SIBUR Holding, Moscow, has started preparatory work for a project designed to expand production capacity for methyl tertia...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected