A Request To Reign in Surging Ethanol Prices


Two Republican senators on Wednesday called on the U.S. Environmental Protection Agency to act "decisively" to protect consumers from the rising cost of ethanol credits refiners are required to buy to comply with the nation's biofuel mandates.

The cost of ethanol credits, or RINs, have surged in recent weeks as concerns mount about ethanol supply shortages and the looming risk of hitting a "blend wall" that will make it hard for refiners to meet their biofuel blending obligations.

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Senators David Vitter of Louisiana and Lisa Murkowski of Alaska said the United States cannot afford to have these costs passed along to consumers at the pump. Their letter was the first official response from lawmakers to the recent spike in the cost of credits.

"We ask that you utilize any and all existing regulatory authority and flexibility to address the issue of rising RIN costs and alleviate the threat of increased consumer fuel costs," Vitter and Murkowski said in a letter to the Obama administration nominee to head the EPA, Gina McCarthy.

Vitter is the top Republican on the Senate environment and public works committee, and Murkowski is the leading Republican on the Senate energy and natural resources committee.

Administered by the EPA, the nation's Renewable Fuel Standard, which requires refiners to blend biofuels into U.S. gasoline and diesel fuel, has become increasingly controversial over the years.

Oil and gas companies now say that the mandate is unworkable, and the top oil trade group, the American Petroleum Institute, is pushing to have the mandate repealed.

Slumping gasoline demand and other factors have made meeting the targets set by the mandate more difficult without allowing higher levels of ethanol to be blended into each gallon of gasoline, a shift that refiners do not support.

While the EPA has authorized the use of up to 15 percent ethanol in each gallon of gasoline for cars built since model year 2001, refiners have argued the higher blend could damage older vehicles. Gas station operators and oil refiners have raised concerns they would be liable if engines are damaged.

Vitter and Republican Senator Roger Wicker, of Mississippi, introduced legislation last month that would block the EPA from allowing higher levels of ethanol to be blended into gasoline.

Still, ethanol producers argue that biofuels are helping to lower gasoline prices, and they blame the current credit cost woes on refiners' opposition to higher ethanol blends at the pump.

RIN stands for Renewable Identification Number, a numeric code that producers or importers of renewable fuels are required to generate for each gallon.