* PBF now budgets $160 million for RINs in 2013, up from $60 million
* PBF to blend more renewables into its fuels to offset RIN costs
* Company requires 400 million RINs to comply with law
NEW YORK, May 2 (Reuters) - Refining company PBF Energy said Thursday the rising price of renewable identification numbers (RINs) took a bite out of first-quarter earnings and it would blend more ethanol into its gasoline output in the second half to offset the cost.
PBF Energy Chairman Tom O'Malley said during the company's first-quarter 2013 earnings call that PBF had budgeted about $15 million for RIN purchases during the quarter but went $10 million over that amount because of a spike in the price of the renewable fuel credits.
Federal law requires refiners and importers to show the credits as proof of compliance with rules requiring the blending of renewable fuels such as ethanol and biodiesel into U.S. gasoline and diesel stocks. If refiners or importers don't blend enough ethanol, for instance, they must make up the difference by buying the credits.
O'Malley said PBF Energy needs 400 million RINs this year to comply with the law, which he called a "hidden tax on the public" because the company will have to pass the rising cost of RINs on to consumers.
Ethanol RINs surged from about 5 cents per gallon in October 2012 to more than a dollar per gallon in early March. They were seen trading as high as 78 cents per gallon as of Thursday afternoon.
The rising costs have hurt refiners like PBF that purchase RINs in the open market to satisfy a portion of their renewable fuel blending requirements. A PBF Energy spokesman said the company now expects to spend $160 million on RIN purchases in 2013, versus the $60 million it had originally budgeted.
To offset the rising cost of RINs, O'Malley said PBF Energy will blend more of its transportation fuel output with renewables during the second half of the year. The company currently blends about 50 percent of its fuel output, but will seek to increase that to 75 percent, he said.
The company will also seek to reduce its RIN exposure by exporting more of its refining output, O'Malley said. PBF has begun to export about 20,000 barrels-per-day of middle distillates but is unlikely to export finished gasoline, he said.