EPRINC: RFS’s biofuels mandate could create 2014 gasoline price spike

Requirements for additional ethanol and other biofuels as part of the total US motor fuel supply under the federal Renewable Fuel Standard could lead to a possibly significant gasoline price spike in 2014, a new analysis by Energy Policy Research Foundation Inc. (EPRINC) concluded.

The increase for gasoline with a 10% ethanol blend could be as little as 20¢/gal, but only “under somewhat unrealistic and favorable assumptions regarding enormous gains in market penetration and consumer acceptance for E85,” it said. A spike of 50¢-$1/gal is more likely, the July 22 study added.

It noted that refiners, importers and other obligated parties will continue to use renewable identification numbers (RINs) as credits to document they are meeting growing requirements to use biofuels.

“Until 2013, ethanol RINs were abundant and generally sold for a few pennies a gallon,” EPRINC’s analysis said. “Much attention was called to the RFS this past week following new record high RIN prices. The price for 2014 D6 RINs, conventional renewable fuel RINs generated in 2014, breached $1.40.

“What is perhaps most significant about this most recent surge in RIN prices is not the price of RINs per se, but how the price foreshadows RFS compliance costs in 2014,” it indicated.

EPRINC issued the report as the House Energy and Commerce Committee’s Energy and Power Subcommittee prepared to hold hearings July 23 and 24 on the RFS’s motor fuels provisions.

Contact Nick Snow at nicks@pennwell.com.

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