How Are Proposed RFS Standards Impacting Customers At The Pump?

How Are Proposed RFS Standards Impacting Customers At The Pump?

It’s been just over one month since the EPA released its proposed renewable fuel standards. That rule sets how much ethanol must be blended into the nation’s fuel supply. While the news may ultimately impact farmers, we discuss how these proposed standards are already costing businesses and consumers at the pump.

The EPA has released what the Agency says is a ‘growth orientated’ renewable fuel standards proposal.

“With respect to the market access, we are very relucatant to interfere of what individual forms choose to sell or not to sell,” said EPA Director of The Office of Transportation and Air Quality, Christopher Grundler.

But those in the ethanol industry say the standards are doing just opposite of what EPA says creating some damage within the market place. While the RFS may only be proposed, leaders say they’re already seeing a negative impact.

“They may not think it’s that big of a deal on gasoline, but it’s a huge impact on E-85, and potentially E-15 market,” said Protec Fuel CEO, Todd Garner. Protec Fuel is an ethanol supplier and consultant, installing ethanol fuel and equipment stations around the country.

The company’s CEO, Todd Garner says the standards have already put some projects on hold.

“We have 400 stations that we’re ready to convert right now. Economically, right now they’re very borderline as to whether or nto to move ahead,” said Garner.

That’s because of the Renewable Identification Number, or RIN. It’s a tracking number attached to every gallon of renewable fuel to show compliance to the standards. Companies can sell excess RINS or gallons to other companies as well. If refiners can’t supply a volume obligation, they buy a RIN. If refiners can’t supply a volume obligation, they buy a RIN. Garner says the RIN value fell because the EPA lowered volume requirements. Garner says the RIN value was decreased by half only days after the announcement. Since that time, it’s trading higher but nowhere close to where it was before.

“One month ago, it was probably close to 70 cents then 35 in a matter of a few days,” said Garner.

It also means higher costs for the consumer.

“The consumer is paying a lot more for E-85 now than they were a month ago. Since the EPA announcement, it’s different around the country, but I would say they’re paying anywhere from 20 to 35 cents more than they were before the announcement and probably at least a nickel for E-15,” said Garner.

Since the EPA released the rule, we saw ethanol prices fall again. We saw RIN prices fall again. That’s taking money out of my farmer’s pockets. If these proposed levels become the final levels, we’re going to see this thing hang-over for a long time because we have so many excess RINS already produced in this market place,” said Al-Corn Clean Fuel Chief Executive Officer, Randall Doyal.

RIN values aside, on the ethanol production front, the EPA says there is growth year-over-year in the Agency’s proposal.

“This proposal is specifically designed to overcome this E-10 blend wall. It’s just not as much as Congress imagined in 2007,” said Grundler.

Garner says the RIN is trading close to 45 cents. If the EPA changes the standards closer or back to Congress’ level, he thinks the RIN values will bounce back. The EPA has been vocal about releasing final standards in November.

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