CNBC: The government could take it easy on drivers

August 8, 2013

Alex Rosenberg, August 7 – Have you been paying too much for gasoline? The culprit might be corn. But a shift by the Environmental Protection Agency could alleviate the situation.

In an attempt to spur usage of biofuels, the EPA mandated that refiners blend a given amount of ethanol into gasoline. That requisite number of gallons of renewable fuels required has risen over time, and is set to rise further.

The problem is that fuel consumption is falling. And since the law enacted by Congress simply requires more gallons of biofuels to be used (rather than requiring a certain percentage of biofuels in each gallon), declining gasoline usage makes it difficult to blend in the growing amounts of ethanol required.

This is because few cars on the road can safely take gas with more than 10 percent ethanol, leaving refiners searching for another solution.

So to substitute for additional ethanol, refiners have bought Renewable Identification Numbers, known as RINs. These RINs have become a new input cost for gasoline, and they have been rising in price. Many have worried that as the standards for the amount of biofuels needed increases, the situation will become worse, driving the cost of RINs yet higher.