Not Logged In Log In   Sign Up   Points Leaders
Follow Us    12:56 AM

Message Forum - Read Message

Category: All Things Ethanol > Topics Add to favorite topics   Post new topicPost New Topic
Author Topic: Valero say's new ethanol blending rules to increase pump prices Back to Topics
wolfman48

Rookie Author
Louisville

Posts:38
Points:1,660
Joined:Jan 2010
Message Posted: Mar 30, 2013 5:27:51 PM




By ALISON SIDER

Valero Energy Corp. VLO +1.20% said it will have to spend two or even three times as much as it did last year to comply with the federal ethanol-blending requirement due to the high prices of credits it needs to buy under the law.

The company said in a presentation posted on its website Tuesday evening that it will spend $500 million-$750 million buying the credits this year, compared to $250 million in 2012 and $230 million in 2011.

Refiners have warned that a price spike in the market for credits they buy to comply with the ethanol blending requirements will cut into their earnings and consumer wallets. They have urged the Environmental Protection Agency not to increase the volume of ethanol that must be blended into motor fuel this year.

Under a 2007 law, the EPA mandates that a certain amount of ethanol be blended into the U.S. gasoline supply each year. When an ethanol maker produces a gallon, the company receives a credit representing roughly that much ethanol. The credits--called Renewable Identification Numbers, after the numerical code assigned to each gallon--can subsequently be bought by refineries to help meet the mandates.

Cost of the credits has shot up from 3 cents a gallon in 2012 to more $1 a gallon at one point recently. The price of the credits has fallen to about 70 cents a gallon as buyers appear to have pulled back somewhat, said Denton Cinquegrana, executive editor at the Oil Price Information Service.

"It seems to have found a bit of a comfort zone, though I don't know if you can call that comfortable," Mr. Cinquegrana said of the still-elevated prices.

Bill Day, a spokesman for Valero, said it is difficult to know exactly what is driving the opaque market, but there seem to be fears that refiners soon won't be able to meet their quotas due to a looming "blend wall" beyond which more ethanol cannot be added to motor fuel. "It seems like there's a lot of nervousness in the market about the blend wall," he said, adding that it appears there has been a "run on RINs" with speculators hoarding them in anticipation of higher prices in the future.

The EPA's proposal for this year, which could be made final as soon as next month, could force refiners and fuel importers to use upward of 14 billion gallons of ethanol. Unless demand picks up, that would mean ethanol would comprise more than 10% of U.S. gasoline, a proportion that refiners say is a firm upper limit.

Valero said Tuesday that suggestions that refiners sell fuel blends with 15% ethanol for newer vehicles are unworkable because car manufacturers don't recommend drivers fill up with higher ethanol content fuel.

Raymond James analysts wrote in a note Wednesday that the ultimate cost to Valero is still a question mark, since costs of complying with the fuel mandate will likely be passed on to consumers. "Ultimately, this cost figure gives investors something to point to, but still doesn`t solve the entire puzzle as higher gasoline could likely offset this RIN cost," the analysts wrote.

Valero said Tuesday that high RIN prices will flow through to consumers and will drive up prices at the pump by encouraging fuel makers to export gasoline to markets that don't have blending requirements and will lower imports of gasoline and diesel, as well.

The solution, the company said, is to eliminate or reduce the renewable fuel standard or to make ethanol blenders, not refiners and importers, responsible for compliance.




REPLIES (newest first) Post a Reply
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: Jun 28, 2013 11:50:59 AM

Hannie,
Completely understand. This one was bugging me a lot. As you point out the oil industry has slung a lot of mud over the years, but as we discuss things here part of my goal has always been to make sure everyone understands how certain things work. Not asking for people to agree or disagree, but a least just have a level platform from where to start the discussion. I tend to use the language I speak everyday at work when posting here and unfortunately our slang and industry speak does not always align with non industry folks understanding of the actual practices in the industry.
Profile Pic
Hannie59
All-Star Author Appleton

Posts:964
Points:24,300
Joined:Apr 2010
Message Posted: Jun 28, 2013 7:22:53 AM

No need brerrabitTX, I snuck two in before my month, not counting this one. Sometimes you have to make a rebuttal. There was a series of posts by two posters that it's killing me not to reply LOL. Plus some good ones by other folks I'd love to back up. But...

If one is an optimist, then they'd say that a post or two is still far better than how many I was doing before...



[Edited by: Hannie59 at 6/28/2013 7:28:38 AM EST]
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: Jun 27, 2013 11:37:48 PM

Apologies, I am posting before my agreed to one month no posting period, and further apologies for not stating the RIN's procedure better. krzysiek ck is correct in his definitions of RIN's however I have been incorrectly identifying what I mean by RIN's. More specifically the RIN credits are actually what is being bought and sold, not the RIN. In my business we simply refer to the value of RIN credits as RIN's which when talking with someone not dealing with it every day is incorrect terminology. RIN's are attached to ethanol as it is created and reported to the EPA, however at that point and at the point where the ethanol is purchased there is no credit created. The creation of the credit happens when the ethanol is actually physically blended with gas. This occurs in the vast majority of cases at terminals where ethanol and gas is mixed out of two separate tanks on its way to the truck for delivery to a station.

Per the RFA refiners of gasoline must have a certain number of credits at the end of each year. Now the issue there is that many refiners do not create the credits. Refiners who make the gas sell much of it to others who actually move it to a terminal and blend it with ethanol to create the credit.

So Take an area like Washington state. BP has a refinery there that can process 250,000 barrels a day of crude and then moves it to market. The only issue is they cannot sell all of that gas through their own branded stations or unbranded to no name stations. As a result they sell in bulk at the tailgate of their refinery to third parties. The third party then moves the gas via pipeline to a terminal where they blend it with ethanol and sell it a truck at a time over the rack. As of today I am only aware of three pipelines in the US that actually transport pure ethanol or ethanol blended gas. Probably 98% of the ethanol moved in this country is moved by truck, rail or barge and tanked seperatly from gas until it is blended as it is put on trucks for delivery to retail sites. Therefore in these cases BP does not create the credit. Someone else does, however BP needs the credits to meet the RFA standard. So the seller at the terminal if he does not need the credit can then sell it back to the refiners who do need it.

The legislation that was passed in Iowa recognizes this process and is attempting to force sellers of products in Iowa to sell components rather than the ethanol blended fuel. So what a buyer can do once the law is in place is buy gasoline at the terminal, drive away from the terminal to another terminal buy ethanol and splash blend the ethanol into the gas themselves. By so doing they become the blender of record and therefore the owner of the credit and are free to sell those credits on the open market to the refiners that need them. Currently the credits are selling for almost $1 a gallon.

This is the process in practice in the industry today. Promise it is how it works.

Once again apologies to all for not being more clear in my explaination of the process. From now on I will take special care to distinguish RIN's from a RIN credit. A RIN is a number, a RIN credit has a value set by the market and trades for real dollars.
Profile Pic
tdioiler
Champion Author Detroit

Posts:1,014
Points:730,500
Joined:Jul 2011
Message Posted: Jun 27, 2013 10:00:15 PM

What reason would Valero be in the business of ethanol production!?!

Profits! So why would the 'bad old dirty oil industry' want to spread rumors about ethanol? Higher margin crap and Profits!!!

Gotta love it!
Profile Pic
reb4
Champion Author Chicago

Posts:24,457
Points:2,434,025
Joined:Sep 2004
Message Posted: Jun 26, 2013 8:57:04 PM

EPA Says Ethanol Bounty May Push Refiners Over Blend Wall

"Cost of the credits has shot up from 3 cents a gallon in 2012 to more $1 a gallon at one point recently. The price of the credits has fallen to about 70 cents a gallon as buyers appear to have pulled back somewhat, said Denton Cinquegrana, executive editor at the Oil Price Information Service."

tdoiler, as far as worrying about the certain poster, don't worry, very few people actually come in this area

[Edited by: reb4 at 6/26/2013 8:57:57 PM EST]
Profile Pic
Chazzer
Champion Author Nevada

Posts:18,866
Points:3,908,975
Joined:May 2002
Message Posted: Jun 26, 2013 5:48:46 PM

That figures!
Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,316
Points:1,337,630
Joined:Apr 2011
Message Posted: Jun 11, 2013 11:00:20 PM

brerrabbitTX wrote: "I still cannot see your posts unless I do not log in so responding to you is not easy. I don't know why I cannot see your posts but I can't and I have not put you on ignore. Nice trick whatever it is and a great way to make you erroneous statements unchallenged."

This is the second time I'm explaining this to you. Admins on this do not take personal comments lightly. They, not me, blocked you. If you have a problem with it, contact them. You put yourself in this situation so do not try to point fingers at others. It is time for you to look in the mirror for a change.

brerrabbitTX wrote: "So tell me I am wrong all you want since your knowledge of fuel blending is obviously limited you don't know the difference between a RIN and how the value of a RIN is created."

Maybe it is limited but at least is not as wrong as yours. RIN does not have to cost anything and it is transferred when Ethanol is being purchased by a refinery or a blander, or anybody else to that matter.

[Edited by: krzysiek_ck at 6/11/2013 11:02:24 PM EST]
Profile Pic
ace12012
Champion Author Phoenix

Posts:3,812
Points:789,540
Joined:Apr 2012
Message Posted: Jun 11, 2013 1:28:37 PM

no ethanol for me.
Profile Pic
OKRifle
Champion Author Oklahoma City

Posts:13,415
Points:2,407,550
Joined:Oct 2007
Message Posted: Jun 10, 2013 11:34:30 PM

Not good for my vehicle!
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: Jun 10, 2013 9:03:14 PM

krzysiek ck while the RIN is attached to the renewable fuel at it's source when it is created at that point it is worthless. In other words it cannot be sold to a refiner who needs it to meet federal obligations for blending at that point. It has no value until such time as the renewable fuel is blended with gasoline for delivery to a retail site. In other words the value of a gallon of blended product of e-85 with RINs values at 92 cents a gallon would be 78.2 cents a gallon. For all your posturing and positioning that is the reality.

So tell me I am wrong all you want since your knowledge of fuel blending is obviously limited you don't know the difference between a RIN and how the value of a RIN is created.

As far as piping ethanol you point to an 85 mile pipeline mentioned in a five year old article. How many widespread ethanol pipelines have been developed since then? How many are commercially viable and actually move products to real markets? And why in the article you quote does Magellan say they are seeking Federal financing? Mainly because it was not commercially viable then and it is not commercially viable now.

I still cannot see your posts unless I do not log in so responding to you is not easy. I don't know why I cannot see your posts but I can't and I have not put you on ignore. Nice trick whatever it is and a great way to make you erroneous statements unchallenged.

However wrong is still wrong and that's what you are.
Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,316
Points:1,337,630
Joined:Apr 2011
Message Posted: Jun 10, 2013 10:29:23 AM

ElCap wrote: "Ethanol is a waste of money. It costs too much to produce US ethanol and it lowers the mpg per gallon so in the long run we actually use MORE energy vs. saving energy!"

Wrong. Ethanol have positive energy balance while gasoline have negative energy balance. Does this mean that gasoline is "a waste of the money"?
Profile Pic
ElCap
Champion Author El Paso

Posts:1,254
Points:1,109,970
Joined:Jan 2007
Message Posted: Jun 10, 2013 10:15:48 AM

Ethanol is a waste of money. It costs too much to produce US ethanol and it lowers the mpg per gallon so in the long run we actually use MORE energy vs. saving energy!
Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,316
Points:1,337,630
Joined:Apr 2011
Message Posted: Jun 10, 2013 9:50:15 AM

brerrabbitTX wrote: "RIN's are created when you blend ethanol with gas at a terminal for delivery to a station."

Wrong.

"A RIN is a 38-character number assigned to each physical gallon of renewable fuel produced or imported."

Renewable Identification Numbers

brerrabbitTX wrote: "You cannot transport ethanol or ethanol blended gas in a pipeline."

Wrong and you know it. Why are you continuing to spread lies?

An Ethanol Pipeline Begins Service

[Edited by: krzysiek_ck at 6/10/2013 9:50:36 AM EST]
Profile Pic
Maintroll
Champion Author Lexington

Posts:11,256
Points:2,314,985
Joined:Aug 2008
Message Posted: Jun 10, 2013 8:05:12 AM

They are telling an outright lie as ethanol was supposed to have brought down the price of gasoline, furthermore we don't need E-15 ethanol or even E-10 ethanol.
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: Jun 10, 2013 12:25:25 AM

"RIN credits for dummies"

See Big oil gets slammed for spreading lies but no one says a word when the RFA posts this kind of stuff. RFA from the article says:

1.A RIN is produced when a gallon of renewable fuel is produced. Oil companies can then split the RIN from the gallon when they buy the gallon of renewable fuel and sell it on the open market. So, in essence, the oil companies are buying and selling RINs to themselves and then complaining about it to the Wall Street Journal.

RIN's are created when you blend ethanol with gas at a terminal for delivery to a station. There are terminals all over the country and believe it or not, the vast majority of them are not owned by oil companies that need RIN's. You cannot transport ethanol or ethanol blended gas in a pipeline. The ethanol usually comes in by rail and the gas via pipeline. The companies that are required to have RINs are refiners. So all the blenders of record are selling the RIN's to the refiners. So the last line of the above quote is a flat lie propagated and distributed by the RFA.

2.Oil companies can either buy a gallon of renewable fuel to comply with the RFS or buy a RIN credit on the open market. Oil companies have indeed bid up the price of RINs over the last few weeks, but they are doing so voluntarily to avoid the alternative of adding more ethanol to gasoline. Ethanol is 65 cents cheaper per gallon than gasoline today.

A refiner that needs blending credits can blend a gallon or buy a RIN. Buying a gallon of renewable fuel does nothing unless the blend it with gas at the terminal level. Refiners do not sell at the rack level enough product to create all the RINs they need so they must buy RINs to cover the federally mandated requirements.

3.The oil industry’s excuse — that it cannot blend more ethanol because of the blend wall — is smoke and mirrors. Fifteen percent ethanol blends are approved for 75 percent of today’s vehicles which together account for 85 percent of miles traveled. It’s pretty simple; the oil companies will bury the truth and gouge the consumer to avoid blending alternative fuels.

And who pays to increase the tankage at terminals, the blender pumps at stations and the literally billions of dollars that it will cost to shift the entire US market to E-15? It's actually a really critical move for the ethanol lobby. They want the tension around E-15 because they want the jump to be made from e-10 and e-15 being blended at the terminal and force the issue to blender pumps at the stations. This will be a costly move but once accomplished the next move to e-20 and beyond is the flip of a switch on the pump and not huge investments.

4.The oil companies helped design and openly supported the open market RIN credit program they are now using to attack the RFS. The problem for the oil industry is the RFS and RIN credits are working to reduce our dependence on oil, break Big Oil’s monopoly on the gas pump, and create American jobs while also reducing gas prices.

The reality is the industry pushed for the RIN credit open program for a simple and logical reason that the RFA fails to mention. Without it refiners would have no way to create blending credits for all the gas they produce. In other words people would be out blending ethanol into gas at terminals and creating these credits, while the refiners who are the ones that the law says must have RINs could not get them. So the RFA would love for refineries to have to pay huge non compliance fines every year which they would have to if not for their insistence that the credits could be traded in the market. While the current system costs refiners additional money, it does not cost nearly as much as a world without RINs would.

And as for the 65 cents cheaper that ethanol is than gas mentioned in the article, currently ethanol blenders are selling RINs to the gas refiners that need them because of the RFA for 92 cents a gallon.

The reality is the economics of ethanol, gas, and the RFA are so contrived we really don't know what the true costs are.

[Edited by: brerrabbitTX at 6/10/2013 12:25:50 AM EST]
Profile Pic
SilverStreaker
Champion Author Twin Cities

Posts:14,147
Points:2,802,120
Joined:Mar 2006
Message Posted: Jun 7, 2013 2:38:43 PM

Lengas says "SOP". True, increase prices, obtain hefty profits, then blame the increased prices on ethanol. Plenty of gullable people, so it works like a charm!
Profile Pic
ggg452
Champion Author Manitoba

Posts:4,225
Points:943,645
Joined:May 2012
Message Posted: Jun 7, 2013 2:02:03 PM

Of course it would...
Profile Pic
borsht
Champion Author Oakland

Posts:3,333
Points:791,825
Joined:Aug 2012
Message Posted: Jun 7, 2013 1:54:09 PM

Did anyone really believe the rules would decrease prices?
The prices are jacked up in many ways, including blending rules.
Profile Pic
Lengas
Champion Author Gary

Posts:16,341
Points:3,329,875
Joined:Nov 2004
Message Posted: Jun 7, 2013 5:38:24 AM

SOP
Profile Pic
jack4141
Champion Author Alabama

Posts:3,950
Points:889,630
Joined:Mar 2011
Message Posted: Jun 6, 2013 1:25:57 AM

Hmmm
Profile Pic
borsht
Champion Author Oakland

Posts:3,333
Points:791,825
Joined:Aug 2012
Message Posted: Jun 3, 2013 11:16:22 PM

If you want RIN Credits,buy or Sell, or carbon offsets, the brokerage fees are minimal.
http://rinbroker.com/
Profile Pic
gamechanger2011
Champion Author Wichita

Posts:1,894
Points:72,615
Joined:Jun 2011
Message Posted: May 8, 2013 6:24:31 PM

"RIN credits for dummies"
Profile Pic
BigHorne1
Champion Author Missouri

Posts:3,821
Points:851,605
Joined:Jul 2012
Message Posted: May 8, 2013 10:46:20 AM

more like profit making
Profile Pic
GrumpyCat
Champion Author Alabama

Posts:5,422
Points:1,274,790
Joined:Jun 2009
Message Posted: May 8, 2013 10:14:10 AM

I don't see any difference between a penalty for not using ethanol and an outright subsidy for using ethanol.
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: May 2, 2013 10:34:06 PM

I think there are a lot of misconceptions going on here. First is that the summer blends of gasoline required by EPA mandates cost more to make that winter blends so winter blends are not cheaper.

As far as RINs go they are created when ethanol is physically blended with gasoline. Since the vast majority of ethanol burned in this country goes into E-10 that is where all the RINs are created. However the RINs are needed by refiners to fulfill the RFA requirements and make sure the refiners do not face financial penalties. So in the case of many refiners, like Conoco, Holly and Valero they sell a lot of their production to marketers. So for example one of these refiners sell bulk gas straight from their refinery to marketers. The marketer then sends the product via pipeline all over the place. They also contract with ethanol sellers to buy ethanol. When the gas and the ethanol are at the terminal trucks come in to load. As the trucks load the gas is blended with the ethanol and the RIN is created. Problem is that RIN belongs to the marketer who in many cases does not have a refinery and does not need it to fulfill RFA requirements. However the refiner who sold the gas to the marketer does. The marketer has something of value, the RIN, and currently they are worth 70 cents a gallon, or for 10% gas/ ethanol blends 7 cents.

So what Valero is saying is they have to buy those RINs on the open market to fulfill the RFA requirement. This in turn raises the price they have to charge for the gas they sell bulk to the marketers. So basically yes it does raise prices.
Profile Pic
reb4
Champion Author Chicago

Posts:24,457
Points:2,434,025
Joined:Sep 2004
Message Posted: May 2, 2013 6:46:22 PM

gee, weoh, that article contradicts what James said...

Seems to me like just another backhanded subsidy...
Profile Pic
GrumpyCat
Champion Author Alabama

Posts:5,422
Points:1,274,790
Joined:Jun 2009
Message Posted: May 2, 2013 12:15:41 PM

My ethanol free station recently raised the price of the 93 octane ethanol free hose to $1.00/gallon over 87 octane E10. :-(
Profile Pic
BigHorne1
Champion Author Missouri

Posts:3,821
Points:851,605
Joined:Jul 2012
Message Posted: May 2, 2013 10:13:34 AM

I always read the summer blend with ethanol is cheaper than the winter blend. These petroleum companies will do anything to make sure their profits go higher and higher each year, while the consumer is just making it.
Profile Pic
WE0H
Champion Author Twin Cities

Posts:1,662
Points:566,450
Joined:Feb 2011
Message Posted: May 2, 2013 9:41:55 AM

http://www.ethanolrfa.org/news/entry/new-study-rin-credits-not-a-factor-in-higher-gas-prices/
Profile Pic
SilverStreaker
Champion Author Twin Cities

Posts:14,147
Points:2,802,120
Joined:Mar 2006
Message Posted: May 1, 2013 10:08:03 AM

I think the real reason for Valero's pump price increases is Refining margins push Valero profits.
Profile Pic
borsht
Champion Author Oakland

Posts:3,333
Points:791,825
Joined:Aug 2012
Message Posted: Apr 28, 2013 7:55:38 PM

Why isn't Methanol used for meeting RFS requirements?
It's very easy to make from natural gas.
Profile Pic
RedRider1OK
All-Star Author Oklahoma City

Posts:953
Points:26,190
Joined:Mar 2008
Message Posted: Apr 3, 2013 10:03:00 PM

What's ironic is that Valero owns and operates 10 ethanol plants as of today. So, why is Big Oil/Big Eth bashing the RFS and the RIN program or is it just the simple truth? Anyone else comprehenday?
Profile Pic
EvergreenON
Champion Author Ontario

Posts:2,326
Points:892,030
Joined:Apr 2011
Message Posted: Apr 3, 2013 7:12:12 AM

Poor them they do not realize profits..Bull S
Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,316
Points:1,337,630
Joined:Apr 2011
Message Posted: Apr 2, 2013 8:39:30 AM

"The structure of the RFS program, and in particular the regulatory provisions governing the generation and use of RINs, originated during the development of the initial RFS program required by the Energy Policy Act of 2005. Under the statute, refiners, blenders, and importers of non-renewable fuels were responsible for ensuring that specified volumes of renewable fuel were used in the transportation sector. During the process of developing the regulatory program, stakeholders made it clear that requiring each separate obligated party to physically blend renewable fuels into its own gasoline and diesel fuel would require significant and costly changes to the distribution system, fuels markets, and the activities of all involved in the fuel supply chain. At the request of stakeholders, EPA developed the RIN system as an alternative to a direct blending requirement. Finalized on May 1, 2007, the RIN system provides obligated parties with flexibility in satisfying their responsibility to ensure that a specified volume of renewable fuels is used as transportation fuel in the U.S. each year. It also permits renewable fuel producers to sell their fuels in a manner that best meets market demands without forcing sales of volumes directly to obligated parties."

RFS Renewable Identification Number (RIN) Quality Assurance Program
Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,316
Points:1,337,630
Joined:Apr 2011
Message Posted: Apr 1, 2013 2:52:22 PM

"The RIN is attached to the physical gallon of renewable fuel as it is transferred to a fuel blender. After blending, RINs are separated from the blended gallon and are used by obligated parties (blenders, refiners, or importers) as proof that they have sold renewable fuels to meet their RFS mandated volumes. RINs may be used to satisfy volume requirements for the current year or up to 20% of the following year's required RFS volumes."

Renewable Identification Numbers
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: Apr 1, 2013 1:15:18 PM

"Believe this BS. Go ahead. Just another BS excuse for the oil companies to rape you and keep the prices high while blaming something else. Nothing new here. If they eliminate the RFS tomorrow your prices will go up even higher!"How the oil companies communicate this may be questioned but the reality is there is a cost associated with the RIN's.

Basically the concern is that as the amount of ethanol required to be used increases each year it forces the refiners to seek out the additional RIN's. Refiners are the companies required to have them but many of them are actually created by someone else. There are an estimate 2.5 billion surplus RIN's in the market when the year started. Since the amount of ethanol required to be blended is going up it is a certainty that there will be no more surplus RIN's to be had, in other words everyone created from here forward will be needed to meet the law. Estimates are that 1.3 billion of those RIN's will be needed this year to hit the 2013 mandate. That leaves 1.2 billion on the market with no new surplus ones being generated. If the blend number goes up in 2014, which with Obama in office and the current energy phylosophy in this country then they will be needed and as of 2014 there will be no surplus at all.

Yes more can be created by blending more fuel (gas) with ethanol, but that means going to higher percentage blends. Nothing wrong with that but it will cost money. Major terminals spent literally billions of dollars not so many years ago to get to a point where they could blend E-10. If they need to blend E-15 plus then that means that it's investment time all over again. New ethanol tanks, new rail spurs to bring in more ethanol.

I am not in marketing in the oil business so I don't always hear or understand why the marketing sorts go the direction they go but will tell you this. There are costs associated with moving from the current majority E-10 world to a E-15 and beyond majority world. Some may call it lies from the oil companies, but I can assure you that with EPA, state and local permitting requirements for building new tanks and new facilities to handle the new product blends the costs are not cheap.

So call the increased cost lies all you want, a simple business course will tell you that expansion, product redesign, product research, product roll out and infra structure costs are real and not some lie being perpitrating on the consumming public to make more money. It is reality.



[Edited by: brerrabbitTX at 4/1/2013 1:16:43 PM EST]
Profile Pic
brerrabbitTX
Champion Author Houston

Posts:1,404
Points:24,925
Joined:Mar 2011
Message Posted: Apr 1, 2013 12:39:42 PM

"All they have to do ...is exactly what Speedway is doing.

Speedway is doubling the number of stations that sell E85 fuel.

Speedway is getting it's required number of RIN credits by selling more E85 fuel- and that gives them a leg up on the competition. Speedway doesn't have to buy RIN's on the open market- it is using E85 to meet it's RIN requirement.

Too bad other energy companies have not figured that out.

See you at the E85 pump!"

And my friend this is where it is clear that you don't quite understand the rules. The RFS says the refiners need the RIN's based on how much oil they refine into gasoline and diesel. The blender of record is the guy who blends the gas with the ethanol at the terminal for loading onto trucks and taking to the stations.

Then we have the Speedway's of the world. They own no refineries and therefore need no RIN's to satisfy the law and the RFA. If they have in their supply contracts that they get the RIN's at the terminal as they load the product onto trucks for delivery then they are long RIN's. In otherwords, they are generating RIN's and profiting from the sale of those RIN's back to the refiners who need them to satisfy the law.

The way the RFA is written is it puts the burden of acquiring RIN's on companies that do not necessarily create the RIN's therfore creating the secondary market that has sprung up to buy and sell them.

Blend ethanols fuels at the pumps does not create RIN's simply because all the blending has already been done before the product gets to the station. Buying E-20, E-35, or anything up to and including E-85 is acheived by mixing E-85 with gas at the site to achieve the desired blend. However there is no pure ethanol at the site, only E-85 which is already blended and someone has already stripped off the RIN's and sold them.

Profile Pic
BigHorne1
Champion Author Missouri

Posts:3,821
Points:851,605
Joined:Jul 2012
Message Posted: Apr 1, 2013 10:44:58 AM

They are not worried, they just pass it on to the consumers.
Profile Pic
krzysiek_ck
Champion Author Illinois

Posts:8,316
Points:1,337,630
Joined:Apr 2011
Message Posted: Apr 1, 2013 8:37:50 AM

RINs do not have to be purchased, they get transferred with each gallon of ethanol that oil companies buy. On the other hand, oil companies would have to create more fuel and most likely sell it at a lower price. The idea that does not fit well with Big Oil Greed.

[Edited by: krzysiek_ck at 4/1/2013 8:39:34 AM EST]
Profile Pic
James48843
Veteran Author Michigan

Posts:275
Points:167,785
Joined:Aug 2004
Message Posted: Apr 1, 2013 8:30:49 AM

All they have to do ...is exactly what Speedway is doing.

Speedway is doubling the number of stations that sell E85 fuel.

Speedway is getting it's required number of RIN credits by selling more E85 fuel- and that gives them a leg up on the competition. Speedway doesn't have to buy RIN's on the open market- it is using E85 to meet it's RIN requirement.

Too bad other energy companies have not figured that out.

See you at the E85 pump!

Profile Pic
giwan
Champion Author Michigan

Posts:1,636
Points:220,595
Joined:Aug 2009
Message Posted: Mar 31, 2013 9:00:54 PM

The EPA is out of control. They are stretching science and including to much politics
Profile Pic
RedRider1OK
All-Star Author Oklahoma City

Posts:953
Points:26,190
Joined:Mar 2008
Message Posted: Mar 31, 2013 3:25:09 PM

Unfortunately the RINs BS is a real cost that is now being past on to the consumer. Thanks to the RFS and mandated ethanol usage requirements.
Profile Pic
Hannie59
All-Star Author Appleton

Posts:964
Points:24,300
Joined:Apr 2010
Message Posted: Mar 31, 2013 11:53:34 AM

Believe this BS. Go ahead. Just another BS excuse for the oil companies to rape you and keep the prices high while blaming something else. Nothing new here. If they eliminate the RFS tomorrow your prices will go up even higher!



[Edited by: Hannie59 at 3/31/2013 11:54:48 AM EST]
Profile Pic
RedRider1OK
All-Star Author Oklahoma City

Posts:953
Points:26,190
Joined:Mar 2008
Message Posted: Mar 30, 2013 6:16:58 PM

Very true, Very true. It's so unfortunate that our Govt. continues to mandate the blending of ethanol in our fuel supply. RINs and mandated ethanol, just two more gimmicks that penalize the consumer. Get rid of the RFS now and watch fuel prices drop!
Post a reply Back to Topics