Why RINs Could Be 2013's 4-Letter Word For Gas Prices

Tyler Durden's picture

RIN is the mechanism for enforcing the Renewable Fuel Standards (RFS) - Suppliers can either blend their own to meet standards OR buy RINs from other blenders... due to weather issues last year 2012 RINs were in short supply - and with Feb as the last date to pay for them we saw prices surge. These RIN prices were passed on to customers at the pump. The problem is there is now not enough for 2013 (and even less for 2014) which means that instead of $0.03, RINs for 2013 could stay high in the $0.75 to $1.00 range (depending on ethanol production) and higher for 2014. This could mean the implementation of several possible alternatives - dependent on exogenous factors such as the supply of feedstock (corn, soybeans, sugar and palm oil) and spare biofuel production and blending capacity - supporting corn prices but the higher prices, we suspect, will lead Congress to revise (lower) its RFS mandates. At current levels, given the weighting of renewable fuels, RINs are adding around 7c to each gallon at the pump; should the RINs rise to $3, then that will mean a 10% rise in the price at the pump implying a 0.9% drag of GDP growth - something our Congress won't accept.



Via Goldman Sachs,

The key to the recent rally in RIN prices, the instrument used to enforce the US Renewable Fuel Standard, has been the looming inability to blend as much conventional (corn) ethanol as mandated in 2013 and 2014. In particular, while the 2013 requirements will still be met by drawing down carryover of 2012 RINs, there will not be enough 2013 carryover RINs to achieve this in 2014. As a result, our recent analysis showed that it would take several large adjustments to overcome the 2014 shortage in ethanol (D6) RINs.

Unfortunately, the 2014 shortage in D6 RINs likely just got bigger. The EPA RIN reporting system was updated to now include data for February, a key month by the end of which obligated parties need to comply with their 2012 obligations.


Detailed paper here - everything you need to know about RINs and were afraid to ask...

Gs Labyrinth

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Big Ben's picture

So the EPA will give the economy a bad case of the RINs?

Manthong's picture

A Federal Government RIN job?

But maybe with a .9% drag on the economy  we can score another cool quarter trillion or so free Bernanke bucks for Obamba to blow on stuff like exploding slot cars or California solar scams.

SnobGobbler's picture

nah..nah  the "enforcement vehicle" is a slot-machine in a tight casino.  (derivatives bitchez) BOOM!

knukles's picture

"I promise you that the Affordable Care Act will lower your gasoline prices."
  - Paul (prior consultant to Enron) Krugman

Bicycle Repairman's picture

It seems no matter what, various kinds of ridiculous eco-taxes are going to be applied to gasoline.  This is why the price of gasoline does not go down even though usage has dropped like a rock.  America could get completely energy independent with cheap oil and it's not going to matter.  Leviathan must consume all.

TraderTimm's picture

So, RINs have an exponential curve but they're not a bubble?

Where are the claims RINs will crash to zero?

beaker's picture

What a stupid fucking article.  He left out one tiny detail that ethenol is blended at only a bout a 10% rate! So multiply all this hype by .10. That's what is being added to cgas prices.

post turtle saver's picture

... which is planned to soon go to a 15% rate (E15).

otto skorzeny's picture

midwest is getting rain and cool temps-will be biggest corn yield ever-book it. corn prices are already dropping.if grain prices come down it will keep food inflation in check and buy QE4EVA some more time.

Seasmoke's picture

Bernanke is a lucky guy. Is he Irish ?

knukles's picture

Fucking hoot at the Congressional St. Paddy's Day Party

Bicycle Repairman's picture

Shalom O'Bernanke:"Where's me pot of gold?"

FED toady: "You leased it to the bankers who sold it to you-know-who."

Shalom O'Bernanke:"Begosh and begorrah!"

surf0766's picture

Only idiots burn their food for fuel.

RafterManFMJ's picture

Concur, but probably better than drinking it as GMO corn syrup.

Major Major Major's picture

Both brought to you by none other than Monsanto.

Check out what they tossed $7 million at last year: http://biosynthetic.com/

zhandax's picture

Far better to drink it as fine corn liquor.

duo's picture

Only idiots inject toluene and other toxic waste into the ground where their water comes from.

Stuck on Zero's picture

Yep.  We pay through the nose to raise gasoline and food prices and increase pollution. That's government at work.


knukles's picture

A multitude of price supports and subsidies to concoct a less energy efficient fuel
Fucking Bingo

And you wonder why we are where we are....

yogibear's picture

Plenty of them in the Government.

post turtle saver's picture

I doubt anyone here eats switchgrass.

NoDebt's picture

Can we dispense with the idiotic idea of burning food for fuel already?  It was stupid when it was set up and almost comically morose now.  Let's make food cost more so that we can also make gasoline cost more.  Genius.  This is a pure dead-weight loss for the entire economy (except, as usual, for a select few who make out like bandits because they're plugged into the government machinery and the RIN market).

Yes, I'm aware that the corn used for making Ethanol is not human edible corn like you buy at the local farmer's market.  It's silage corn but that makes no damned difference- it's still an input to vast parts of the overall food industry. 

This whole program was set up as a way of being more energy-independent.  So let's not get on the "global warming" rant here- this has NOTHING to do with it.  This is purely a substitution of one energy source for another.  Have advances in NG and shale exploration not spanked this stupid idea's ass red enough yet?

Oh, I'm sorry, I forgot it's gotta be RENEWABLE energy.  My bad.  Nevermind.  Great program.  Keep it up.  Maybe we should eat our own children while we're at it.  They're renewable too.

otto skorzeny's picture

next up-we'll  power our vehicles w/ NG and in the meantime drive the cost of heating homes with it through the fucking roof. also-sugar cane is much higher in energy than corn for ethanol and we could get huge amounts  from Cuba but that pissy embargo we have prevents it.

Momauguin Joe's picture

Time to reconsider the need for "our vehicles".

zhandax's picture

also-sugar cane is much higher in energy than corn for ethanol and we could get huge amounts from Cuba

We could get huge amounts from Mississippi if fedgov weren't paying them so much to eat, drink, and reproduce.

Bicycle Repairman's picture

Last I heard we won't let Brazil sell us cane-sugar ethanol, either.  Guess they are on some double secret shit list.

Flakmeister's picture

You are always a day late and a dollar short:


Clearly the 2012 drought did change things but once again you seem to be full of shit...


You are truly a font of disinformation...

Bicycle Repairman's picture

Wow.  Conditions changed?  The point is that imports of Brazilian ethanol, when conditions have warranted it, have been unwelcome in the USA.  No where in your cited articles is that point even raised.

Keep trifling, fucktard.  You fool no one.

Flakmeister's picture

Keep making shit up, you are on a roll, why stop now?

Bicycle Repairman's picture

Being a useful idiot is no way to go through life.  I suppose you get paid though.

Flakmeister's picture


I suppose one day I will tire of pwn'n you on an almost daily basis...

Bicycle Repairman's picture

Big picture.  You came here hoping to turn ZH into a subset of the oildrum.  How's that working out? 

Ownership?  When anybody pays any attention to your disingenuous fluff it garners more down arrows than up.  If you weren't constantly stalking me, I'd ignore you, too.

You've got nothing, flakey.

The Second Rule's picture

Want to hear something even more  stupid. They're flaring millions of cubic feet of nattie right into the atmostphere in the South Dakota Bakken fields. Poof.

knukles's picture

Clearly visible on satellites.

Flakmeister's picture

That's the free market at work...

RafterManFMJ's picture

I love the Ethanol program; it would be hard to find a program that combines so much damage into one synergistic inferno!

1) Drives up the cost of food inputs, and meat. So JQ Hapless spends more on food.

2) Lowers the avg. mileage per gallon by lowering the energy in Ethanol contaminated gas. So JQ Hapless must spend more to go a given distance.

3) Adds complication to refining and distribution, further increasing the cost per gallon, driving up JQ Hapless' expenses.

4) Requires massive subsidies which the nation, bankrupt, can hardly afford.

5) Uses massive amounts of groundwater that is not/cannot be replenished. Aquifer, goodbye.

6) Damages vehicles, destroys chainsaws and other small engines.

It may be the most Evil, incompetent and criminally Demonic program in the History of the Republic - and that's saying something.  I marvel at it, and I gape with wonder.

The Second Rule's picture

Well, not to keep harping on the same string but...EROEI bitches.

Ethanol is AT BEST a net energy neutral technology. Hell it may even be slightly net negative once you factor in all the energy inputs and outputs. The bottom line is there is no logic in subsidizing this apostasy. There is no net gain in energy for the US. There is no net benefit for the US (except for a few corporate megafarms and the ag lobby).

The Second Rule's picture

Right. Well, that's your ag lobby in action. It's all about the money. That's the only reason this bullshit continues.

Anusocracy's picture

"It may be the most Evil, incompetent and criminally Demonic program in the History of the Republic - and that's saying something.  I marvel at it, and I gape with wonder."

I would give that award to the banning of DDT.

RafterManFMJ's picture

Not really a program more of a policy.  Simple math, really; Do I as a good progressive prefer pretty birds or 500 million dead people with black/brown/yellow skin? And you see the choice that was made.

DDT cannot be hard to manufacture so I'm disappointed no nation in Africa doesn't simply make it, use it, sell it, and crucify any foreigner who crosses their frontier and opens their pie hole about it.

And I do literally mean crucify. Nail them to a cross and let 'em die slow.

The Second Rule's picture

I would say something about peak oil, but really what's the point anymore. 1/3 get it. 1/3 don't. And 1/3 think the earth has a caramel center made out of oil that will last forever (the abiotic nuts).

RafterManFMJ's picture

Nah, the CIA, the Greys and remnants from Nazi Germany are still struggling to control the center of the Earth.  If there is any candy there, it'd be good German chocolate.

The Second Rule's picture

The Nazis...aren't they the ones with the flying saucer base in Antarctica?

RafterManFMJ's picture

Exactly.  That's where the entrance to the center of the Earth is;  Amazing how they continue the fight after so many years.

Teamtc321's picture

"should the RINs rise to $3, then that will mean a 10% rise in the price at the pump implying a 0.9% drag of GDP growth - something our Congress won't accept."


Ya right, our admin will allow the price to sky rocket, then demand congress do their home work. Then just slide another huge tax in its place to keep the fuel price elevated, while increasing everyone's "FAIR fucking SHARE".  


I see the banksters at GS is doing more of Gods work.


Forward Bitcheez.