Since mid-November, the price of RINs has risen significantly. According to OPIS, as of January 6, biodiesel RINs (D4) were more than $1—which was almost double their price in mid-November. And ethanol RINs (D6) increased to 87.5 cents, up from about 45 cents in mid-November. Both sets of RINs have increased over 20 percent since Christmas alone.
This recent spike in RIN prices comes at a time when the refining industry faces much uncertainty regarding their Renewable Fuel Standard (RFS) obligations. Currently, EPA has not issued the 2014 or the 2015 volumes. Yes, we completed 2014 without a rule from EPA on 2014 biofuel volumes. The RFS rule for 2015 is required to be promulgated by the Clean Air Act by November 30, 2014. In fact, the RFS rule for 2015 still has not been proposed. As a result, refiners are left to guess how many RINs they will need for 2014, much less for this year.
While the lack of transparency in the RIN market makes it hard to draw conclusions on why RIN prices are climbing, EPA’s indecision on the RFS rules has created significant uncertainty for everyone involved.
Sadly, in the end, the consumer will feel the pain. While government mandates that distort the free market often result in higher prices to consumers, irresponsible implementation of this program creates uncertainty that exacerbates the problem.