• 3 minutes War for Taiwan?
  • 7 minutes How China Is Racing To Expand Its Global Energy Influence
  • 10 minutes Is it time to talk about Hydrogen?
  • 52 mins U.S. Presidential Elections Status - Electoral Votes
  • 7 hours Mail IN Ballot Fraud
  • 2 hours “Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova
  • 2 days Michael Moore Cranking Up Planet of the Humans Again
  • 19 hours Censorship in USA
  • 3 hours “Consumers Will Pay For Carbon Pricing Costs” by Irina Slav
The 3 Hottest Electric Vehicle Stocks Of The Year

The 3 Hottest Electric Vehicle Stocks Of The Year

Many Electric vehicle stocks have…

Demand Crash Hit U.S. Refiners With Surging Biofuel Blending Costs

U.S. refiners are feeling the pinch not only from the lower fuel demand, but also from the surging costs for complying with the biofuel requirements as refining and blending activity is lower than usual.  

Under the Renewable Fuel Standard (RFS), oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. Refiners that don’t have the infrastructure to blend biofuels must purchase tradeable blending credits known as Renewable Identification Numbers, or RINs.

Because of the slump in demand, blending activity has been lower than what is typical so far this year, and the price of RINs has soared. According to Reuters estimates, the price of corn-based ethanol fuel credits has jumped five-fold so far this year. 

The rise in the price of credits, together with depressed refining margins amid the demand slump, has made life harder for U.S. refiners this year.

RIN credits had increased even before the pandemic after a U.S. appeals court said in January that the U.S. Environmental Protection Agency (EPA) must review its decision to grant waivers for biofuels to three small refineries. EPA’s grounds to grant those three refiners waivers were flawed, according to the appeals court.

David Lamp, chief executive officer and president of CVR Energy, owner of one of the three refineries, Wynnewood, said on the Q2 earnings call last week:

“We believe the tenth circuit got it all wrong when they ruled to vacate three small refinery exemptions earlier this year, and we intend to appeal this misguided tenth circuit RFS ruling to the United States Supreme Court.”

CVR Energy sees its RINs expense at between US$95 million and US$105 million in 2020, CFO Tracy Jackson said. Last year, CVR Energy spent US$43 million on those credits, according to Reuters.

Valero Energy sees its RINs expense for this year at between US$400 million and US$500 million, up from US$318 million last year.

By Michael Kern for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

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