Mario Parker & Lynn Doan, August 7 – Even after yesterday’s 14 percent decline, the price U.S. refiners are paying to comply with a 2007 law that requires companies to blend ethanol with gasoline is at least 10 times more than at the start of the year.
Renewable Identification Numbers, or RINs, tradable credits tied to each gallon of ethanol to show compliance with the law, tumbled to 89 cents yesterday after President Barack Obama’s administration responded to criticism by allowing four extra months to reach this year’s mandate and signaled an adjustment may come next year. RINs traded at $1.43 on July 17, compared with 7 cents at the start of the year.
The price increase is refocusing attention on the cost to refiners from Valero Energy Corp. (VLO) to PBF Energy Inc. (PBF) in adhering to a law enacted under President George W. Bush before America’s energy-production boom. While gasoline consumption has fallen to the lowest level since 2001, the mandate calls for refiners to blend increasing amounts of ethanol this year and next. Congressional hearings on revising the law have failed to bring any relief.