RFA calls for probe into ‘infeasible’ biofuel price fluctuations

US policymakers should keep an eye on the renewable identification number (RIN) market to stop possible price manipulation, the Renewable Fuel Association (RFA) calls.

In a letter sent to the US Environmental Protection Agency (EPA) and Commodity Futures Trading Commission (CFTC), the ethanol trade association encourages the agencies to “closely examine recent events in the RIN market" to determine whether certain parties are "exerting undue influence on prices or otherwise engaging in manipulative practices”.

Bob Dinneen, CEO and president of the RFA, writes in the letter that the association is concerned about opponents of the Renewable Fuel Standard (RFS)using the great price spikes seen since EPA's latest volume proposal to “bolster efforts to change or eliminate the programme”.

RIN prices have risen nearly 30% since 18 May when EPA released its proposed rule for 2017 RFS blending requirements.

“On 26 July, the CEO of the nation’s largest oil refiner – a long-time proponent of RFS repeal or reform – cited the recent RIN price increase as evidence that the programme is ‘broken’ and ‘infeasible’,” Dinneen writes.

RFA data shows there was no immediate mentionable reaction to the proposal on the market in late May, but beginning in early June RIN values began “curiously” increasing, rising from $0.76 to $0.98 by 13 July.

“While various theories have been advanced, the real reasons for this dramatic increase in RIN prices remain unclear. Basic market fundamentals suggest RIN prices should have remained stable – or fallen – following the proposal’s release,” the RFA says.

RIN prices spiked similarly to record levels in July 2013, which the RFA says provided opponents of the RFS fodder for their campaigns and sparked concern among the industry about “inexplicable volatility” in the market.

The EPA and CTFC signed a memorandum of understanding in March, where the CTFC agreed to aid the environmental agency detect possible RIN value fraud or market manipulation.

This article was written by Ilari Kauppila, deputy editor at Biofuels International