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New Statistical Analysis: No Relationship Between RIN Credits and Retail Gasoline Prices

October 16, 2017


WASHINGTON - Despite continued claims by opponents of the Renewable Fuel Standard (RFS), prices of the Renewable Identification Number (RINs) credits used for RFS compliance have not caused changes in retail gasoline prices, according to a new analysis by Informa Agribusiness Consulting. The analysis, commissioned by the Renewable Fuels Association (RFA), looked at trends in the prices for conventional biofuel RINs and retail gasoline from 2013 to the summer of 2017. "Based on statistical analysis, it can be concluded that changes in RIN prices did not 'cause' the changes that occurred in retail gasoline prices in 2013, and this has continued to be the case through the summer of 2017," according to Informa Agribusiness Consulting. Instead, the price of retail gasoline has been primarily driven by movements in crude oil prices and by changes in the spread between domestic and international crude oil prices, as well as seasonal demand, the analysis found. "...[C]hanges in RIN prices have not caused changes in retail gasoline prices (or vice-versa). To any extent that the two are related, it is not a direct causal relationship," the analysis noted. (See Exhibit 1 for more information). "EPA seems to be on a mission to lower the price of RINs," said RFA President and CEO Bob Dinneen.  "The Agency's proposed 2018 RFS renewable volume obligations, which for the first time lowered the total RFS volumes from the previous year, a subsequent Notice of Data Availability proposing to lower the RFS further to reflect anticipated reductions in imported biodiesel, and rumors of an impending proposal to allow exported biofuel to qualify for the domestic program, all would have the effect of lowering the price of RINs. But this analysis demonstrates that EPA's efforts will have no impact on consumer gasoline prices. If finalized, however, these proposals will have a decidedly negative impact on the U.S. ethanol industry by artificially cannibalizing demand. If the intent is to lower the price of RINs, EPA should consider expanding ethanol demand by empowering consumers to utilize higher level ethanol blends. After all, ethanol is less expensive than gasoline today and RINs attached to each gallon of ethanol purchased from a producer are free," he said. "Thanks to the RFS, U.S. ethanol jobs have grown 121% and the value of ethanol's output quadrupled to $32.8 billion in 2016. Big Oil needs to stop scapegoating the RFS and ethanol. The RFS is helping to bring the cleanest, lowest-cost and highest-octane fuel to consumers, and no amount of obfuscation can dispute that fact," Dinneen added. The Informa Agribusiness Consulting analysis is available here.