Politico is reporting:
Congressional committees are taking note of a massive spike in the price of corn ethanol credits that refiners use to meet the Environmental Protection Agency’s renewable fuels mandate — amid concern it could increase gasoline prices.
House
and Senate energy panels are eyeing the price of ethanol renewable
identification numbers, or RINs, which have skyrocketed from pennies a
gallon to more than $1 per gallon in recent weeks. That could cost the
refining industry $7 billion this year, according to a Barclays analyst
as cited by the Financial Times.
But not to worry. The cost of ethanol will only increase the price of gasoline by about 10 cents/gallon.
The volatility and price hike have set Wall Street abuzz and become
the top issue for refiners — some of whom are buying millions of RINs on
any given day. Industry officials are also using the price spike as
additional ammunition to try to get Congress to either scrap or
significantly modify the existing annual renewable fuels production
mandates.
At a public meeting March 8 in Michigan on EPA’s proposed 2013 volume
requirements for the renewable fuels mandate, Marathon Petroleum
testified that corn ethanol RINs prices could amount to a 10-cent
increase in gasoline prices.
But refiners are going to take a beating. Unless they pass the cost of ethanol unto the consumer. Let me guess.
EPA-mandated ethanol production reminds me a lot of USSR's central planning back in the day. That worked out well, too.
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