* PBF now budgets $160 million for RINs in 2013, up from $60
* PBF to blend more renewables into its fuels to offset RIN
* Company requires 400 million RINs to comply with law
NEW YORK, May 2 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
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