Ethanol Wall Costs Refiners $1.35 Billion

Discussion in 'Too Hot for Swamp Gas' started by G8trGr8t, Mar 31, 2014.

  1. G8trGr8t
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    G8trGr8t Premium Member

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    which costs the consumers of their products $1.35B. and that is a conservative estimate....and something tells me the refiners put a little on top for being the middleman for uncle sam.

    Short story, the volume of ethanol required to be blended into US gasoline would have exceeded the 10% threshold where it is known to damage cars so refiners had to pay for ethanol credits in lieu of using ethanol. Those credits spiked as the total volume of gas consumed

    Ethanol blend wall cost refiners at least $1.35B in 2013, Reuters review says
    Mar 31 2014, 12:43 ET


    • Last year's spike in the price of ethanol blending credits cost independent refiners at least $1.35B, more than 3x as much as the year before, according to a Reuters' review of securities filings.
    • The tally is seen as a conservative estimate, since it includes only nine refiners that disclosed the figures; others affected did not specify the cost of buying RINs used to meet quotas for blending biofuel into gasoline and diesel.
    • The review also highlights how the impact was unevenly distributed, with independent refiners CVR Refining (CVRR) and LyondellBasell (LYB) alone bearing more than 20% of the cost although they account for 2.5% of daily U.S. refining capacity.
    • Valero Energy (VLO), with ~10% of U.S. refining capacity, spent ~$517M on RINs in 2013, and estimates it will spend another $250M-$350M on RINs this year.
    • The data may give the companies more firepower as they urge regulators to stick to an earlier proposal to cut back ethanol requirements after an outcry from biofuels companies.

    http://in.reuters.com/article/2014/03/31/rins-spike-costs-idINL1N0MO2B620140331

    The regulatory burden is at the heart of a fierce lobbying battle between refiners fighting to ease the rules and ethanol proponents hoping to keep them in place. Saddled with hundreds of millions in additional costs, refiners turned up the ante in Washington last year, successfully convincing environmental regulators that ethanol blending capacity had hit its peak.

    In November, the EPA explicitly recognized the so-called "blend wall," proposing to cut corn ethanol blending quotas from 14.4 billion gallons to about 13 billion gallons for 2014. The proposal caused RINs to fall as low as 22 cents each.

    But in recent months, RINs have risen anew, largely on uncertainty over whether the proposed cuts will stay in place. The EPA's proposal is not yet finalized, and since it was unveiled in November, the biofuel industry has redoubled its efforts lobbying the White House and the EPA to change course.

    In February, EPA administrator Gina McCarthy caused a stir in the RINs market after telling state agricultural officials that the final rule will be "in a shape that you will see that we have listened to your comments."
  2. HallGator
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    HallGator Administrator VIP Member

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    Is there any good reason we need to still be using ethanol at all?
  3. exiledgator
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    exiledgator Gruntled Premium Member

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    Iowa Primaries?
    • Winner Winner x 2
    • Agree Agree x 1
  4. umcpgator
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    umcpgator Well-Known Member

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    One purpose is to replace MTBE to raise the octane number.

    http://en.wikipedia.org/wiki/MTBE
  5. Gatorrick22
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    Gatorrick22 Well-Known Member

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    Wasn't it energy secretary Chu and Obama that both wanted $10/gallon gasoline too? All part of Obama's plan....... to kill more jobs so that the unemployed will go running to vote for the Dems because of freebies that will give them because there is no work...

    What a perfect scam! Kill jobs and make thinks like food so expensive that more people will need the nanny state to step in and help them. And who wants the nanny state? The Dems and who will vote for them? The newly unemployed that need these hand-outs that the Dems are too quick to offer these unemployed peoples.... Just on small part of Obama's master plan.

    Keep everyone in America unemployed and/or broke... and offer them freebies in exchange for votes.
  6. Lawdog88
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    Lawdog88 Well-Known Member

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    Hey, mechanics gotta' work too.

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