Oil companies have suggested that increased prices for conventional ethanol RINs (Renewable Identification Numbers) are leading to higher gasoline prices at the pump. Some have even deceptively claimed RINs are adding as much as $0.10 per gallon to the retail price of gasoline. This assertion is completely absurd and is easily disproven with a series of very simple calculations. Truth be told, ethanol continues to sell at a discount to gasoline and continues to offer savings at the pump, even when the impact of higher RIN prices is considered. The Renewable Fuel Standard (RFS) requires the use of 13.8 billion gallons of "renewable fuel" in 2013. Based on history, we assume obligated parties (typically oil refiners and gasoline blenders) will primarily use grain-based ethanol to meet the "renewable fuel" requirement because it is the most economical option. The Energy Information Administration (EIA) projects 2013 grain ethanol production at 13.1 billion gallons. We assume approximately 600 million gallons of ethanol will be exported. Because exported ethanol cannot be used to satisfy RFS requirements, approximately 12.5 billion gallons of ethanol will be available for RFS compliance in 2013. This means obligated parties would need to use 1.3 billion surplus RINs to bridge the gap between physical ethanol use and the 2013 RFS requirement. It is estimated that 2.3-2.5 billion surplus RINs are available, meaning there is ample supply to facilitate 2013 RFS compliance. An important caveat is that this assumes gasoline demand for 2013 remains at the levels projected by EPA when it sets the final 2013 Renewable Volume Obligations (RVOs)—i.e., if 2013 gasoline demand turns out to be lower than projected by EPA, then the actual blending obligation will be somewhat lower than 13.8 billion gallons. The year-to-date average RIN price has been $0.32, according to OPIS. The March average has been $0.84. For the sake of argument, we will aggressively assume RINs average $0.80 for the entire compliance year of 2013. Therefore, the total cost of the 1.3 billion RINs needed for 2013 compliance would be $1.04 billion. When spread across projected gasoline consumption of 133.8 billion gallons, the RIN cost would be $0.0078 per gallon (less than eight-tenths of a cent). That's a far cry from the oil industry's wild claims of $0.10 per gallon. It should be noted that $0.0078 per gallon is a worst case scenario that assumes: 1) the full cost of the RIN is passed through to the consumer, 2) obligated parties had to purchase RINs at an average of $0.80, rather than using banked RINs that were obtained at far lower prices (e.g., the average RIN price in 2012 was $0.03), 3) EIA is correct that only 13.1 billion gallons are produced in 2013, 4) obligated parties continue to refuse to offer E15 in meaningful quantities, 5) actual 2013 gasoline demand is consistent with projections at the time the RVO was set, and 6) ethanol stocks remain relatively steady at roughly 800 million gallons. Further, ethanol continues to sell at a considerable discount to gasoline. Year-to-date, ethanol has traded for $0.58 per gallon less than gasoline. This means a gallon of E10 (10% ethanol/90% gasoline) would cost $0.058 less than a gallon of unblended gasoline (100% gasoline). Therefore, even when a worst-case RIN price is included, ethanol-blended gasoline still offers significant savings to U.S. consumers. If RIN prices average $0.80 and the ethanol discount to gasoline averages $0.58 per gallon, and if both impacts are fully passed through to retail, E10 would still be $0.05 per gallon cheaper than unblended gasoline. This $0.05 savings is based on simple blending economics and does not include the larger economic effect that ethanol has on gasoline prices. Because ethanol extends gasoline supplies and reduces oil demand, it exerts significant downward pressure on gasoline prices. According to a detailed econometric analysis by economists at the University of Wisconsin and Iowa State University, this effect resulted in gasoline prices being an average of $1.09 per gallon less in 2011 than they would have been without ethanol.