X

Sign Up To Our Free Newsletter

Join Now

Thanks for subscribing to our free newsletter!

ERROR

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

  • 3 minutes Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen.
  • 7 minutes Scientists Warn That Filling The Sahara With Solar Panels Is A Bad Idea
  • 11 minutes United States LNG Exports Reach Third Place
  • 15 minutes Joe Biden's Presidency
  • 6 hours IS SAUDI ARABIA SENDING A MESSAGE TO BIDEN
  • 1 day America Makes Plans to Produce Needed Rare Earth Minerals Domestically
  • 11 hours Texas forced to have rolling black outs, primarily because of large declines in output from fossil fuel power plants
  • 1 day U.S. Presidential Elections Status - Electoral Votes
  • 3 days Former BP Exec "Biden not in war against oil" . . Really ?
  • 3 days Here we go - again: plug-in hybrids cost motorists more than what they were told
  • 3 days Texas Supply Chain Massacre
  • 1 day Top Conservative Lawyer Says Trump Can Stand Trial
  • 1 day “Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova
  • 3 days An exciting development in EV Aviation: Volocopter

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