Speculators, looking to make a quick buck, have been hoarding these RIN credits. These speculators rightfully believe that despite its obvious problems, the Obama Administration will do little to change the biofuel mandate and that credits will become increasingly scarce in coming years, meaning prices will continue to rise. This has prevented the small refineries with a legitimate need for the RIN credits from obtaining them. The byproduct quite obviously has been prices have gone through the roof. At the beginning of the year, the price of RINs was under ten cents, but today that price has increased by as much as 2,000 percent. The Heritage Foundation notes that the increasing price of RINs is “driving up domestic prices and inflicting huge costs on the American economy.”
President Obama and the EPA know that greedy speculators are driving up RIN prices and have yet to reveal the identities of RIN credit holders in hopes that they will continue to drive the price of gasoline up. This allows the Obama Administration to exert an unofficial tax on gas without expending the political capital required to pass such a tax in Congress. This pleases environmentalists because the costs are being passed onto Americans in the form of rising gasoline prices.
Compounding the problem is the massive amount of fraud in the RIN market. In fact, the EPA does not proactively enforce the authenticity of RIN credits and oil refiners end up wasting millions of dollars purchasing fake RINs only to realize that they have been duped after submitting them to the EPA. The Wall Street Journal reports that “[r]efiners have been ripped off to the tune of $200 million so far by crooks and government fines, which consumers ultimately pay for at the pump.”
Last month, the EPA took steps to address the rising price of RINs and gave refiners an extra four months to reach the 16.5 billion gallons of renewable fuel required. Unfortunately, the EPA has merely stalled the inevitable instead of making the structural changes necessary to alleviate rising RIN prices over the long-term. In the short term, small- and medium-sized independent refineries forced to purchase increasingly expensive RINs will likely have to lay off workers, and in the long term, these refineries will be in the exact same position that they were prior to the EPA’s actions: forced to shut down.
At the very least, President Obama should release the names of RIN credit holders and create a more transparent marketplace. But what the President really needs to do is step back from his war on gasoline and work with Congress to make meaningful reforms and/or eliminate this archaic policy; otherwise, American families will face the consequences in the form of higher gas prices when they can least afford them just as more workers lose their jobs.