Ethanol credit prices fall on Trump’s regulatory freeze

President Donald Trump speaks last week while visiting the Boeing South Carolina facility in North Charleston, S.C. (AP Photo/Susan Walsh)

President Donald Trump’s decision to delay an increase in the amount of ethanol blended into the country’s fuel supply appears to have offered some reprieve to U.S. oil refineries.

The price of the Renewable Identification Number credits the government requires refineries to buy in order to produce gasoline fell by almost half during the month of January to 44 cents a gallon as of February 1, according to a new paper by Bud Weinstein, associate director of Southern Methodist University’s Maguire Energy Institute.

“The reduction in RIN prices that has resulted from the freeze supports the notion that speculators in the RIN market have caused some of the harm that contributes to fuel margin differences,” he wrote. “Changing the point of obligation will provide permanent relief to keep spectators out of the RIN market and stabilize RIN prices while making fuel margins more equitable.”

The paper was commissioned by the trade group Small Retailer Coalition as it continues to press the U.S. Environmental Protection Agency  to shift the onus for meeting the ethanol mandate from oil refineries to the fuel marketers that actually blend the ethanol – a group that includes larger gas station chains like Murphy USA and Sheetz.

The issue is that the larger chains are using the money they make blending ethanol to sell their gasoline on the cheap – undercutting the smaller gas station around the corner.

“Absent a shift in the point of obligation, small retailers will be increasingly driven out of business,” Weinstein wrote.

Refiners have been lobbying the EPA for years to shift responsibility for ethanol, arguing they are paying through the nose as financial speculators drive up RIN prices.

One of their principal voices is the billionaire investor Carl Ichan. And with President Donald Trump, a personal friend of Ichan’s, in the White House, speculation has been rampant around Capital Hill whether a rule change might be in the works.