Spencer Jakab, July 29 – “Non, je ne regrette rien,” sang Edith Piaf. But lawmakers may regret RINs – the wacky system set up to administer biofuel mandates.
The gift to the farm lobby in 2007 known as the Renewable Fuel Standard requires an escalating amount of ethanol to be blended into each gallon of gasoline each year, verified by 36 digit Renewable Identification Numbers akin to certificates that can be used or traded. This year’s mandate of 13.8 billion gallons is finally more of the corn-based fuel than the market can handle.
Until recently, refiners had used RINs stockpiled in prior years. Now they are scarce and the price has soared from a few cents a gallon to about $1.40 this month. Next year’s RINs may be dearer still as the mandate rises to 14.4 billion gallons.
A problem that has energy executives tearing their hair out may soon spill over to the consumer. Absent Congressional action, the increased cost of RINS could lead to a meaningful increase in the price of gasoline.