by Sundance at The Conservative Treehouse
Last Friday the Biden administration raised the mandatory amount of biofuel, specifically ethanol, that must be blended within the U.S. gasoline supply. The previous amount of 10% (summer blend) was raised to a year-round 15% (waiver) by the Environmental Protection Agency (EPA). This is likely to lead to two sets of bigger issues, less food and higher gas prices.
♦ First issue. – The Renewable Fuel Standard (RFS) is a government mandate, passed in 2005 and expanded in 2007, that requires growing volumes of biofuels to be blended into U.S. transportation fuels like gasoline and diesel every year. Approximately 40 percent of corn grown in the U.S. is used for ethanol. Raising the amount of ethanol required in gasoline will result in the need for more biofuel (corn). With farming costs and outputs already under pressure this could be problematic.
♦ Second issue – The EPA enforces the biofuel standard by requiring refineries to submit purchase credits (known as Renewable Identification Numbers, or RINs) to the Environmental Protection Agency (EPA) proving the purchases. This enforcement requirement sets up a system where the RIN credits are bought and sold by small refineries who do not have the infrastructure to do the blending process. They purchase second-hand RIN credits from parties that blended or imported biofuels directly. This sets up a secondary income stream, a trading market for the larger oil companies, refineries and importers.
The RIN credit trading platform is similar…
Continue Reading