• 4 minutes US-backed coup in Venezuela not so smooth
  • 7 minutes Why Trump will win the wall fight
  • 11 minutes Oil imports by countries
  • 13 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 13 hours Climate Change: A Summer of Storms and Smog Is Coming
  • 11 hours Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 12 hours The Quick Read On MBS's Tour of Pakistan, India And China
  • 13 hours Iran Starts Gulf War Games, To Test Submarine-Launched Missiles
  • 12 hours BMW to add 2,000 more jobs at Dingolfing plant
  • 11 hours Teens For Climate: Swedish Student Leader Wins EU Pledge To Spend Billions On Climate
  • 14 hours Saudi A to Splash $100 Bln on India
  • 1 day Itt looks like natural gas may be at its lowest price ever.
  • 14 hours Venezuela: Nicolas Maduro closes border with Brazil
  • 7 hours Washington Eyes Crackdown On OPEC
  • 1 day Amazon’s Exit Could Scare Off Tech Companies From New York
  • 22 hours NEW FERUKA REFINERY
  • 10 hours Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil

Big Numbers, Big Profits: The Fleetingly Lucrative RIN Trade

Renewable energy credits, or RINs, are one of the hottest things on the energy market right now because they are making up for a shortfall of refining capacity to blend ethanol with gasoline in compliance with renewable fuel standards (RFS), shortfalls from suppliers, and lower demand for gasoline. But this is a small window of opportunity, so it’s now or possibly never.

The RIN is a 38-digit serial number attached to each gallon of ethanol. If an oil company or another party under blend obligations blends more renewable fuel that it needs to for the RFS quota, it accumulates more RINs than it needs and then can trade or sell those to another company that would rather buy RINs than blend ethanol. This is the open RIN market, and they can only be traded at the end of the supply chain, after they have been separated from the gallon of renewable fuel—once it becomes a being of its own.

Each gallon of renewable fuel is equivalent to one RIN. What happens is that when an oil company buys a gallon of renewable fuel, it takes that RIN and sells it on the open market. There’s a choice here: oil companies can either buy a gallon of renewable fuel or they can buy an RIN to meet their Renewable Fuel Standard (RFS) quota instead. They are interchangeable.

Oil companies are bidding up the price of RINs rather than adding more ethanol to gasoline to meet the RFS. Right now, ethanol is about 65 cents cheaper than gasoline (per gallon). The justification…

To read the full article

Please sign up and become a premium OilPrice.com member to gain access to read the full article.

RegisterLogin



Oilprice - The No. 1 Source for Oil & Energy News