WASHINGTON, March 27 The recent surge in prices
for the U.S. ethanol credits known as RINs is due to
speculation, the top-ranking Republican on the Senate Judiciary
Committee said on Wednesday.
Iowa Senator Chuck Grassley said he had "just one word -
speculation," when reporters asked about the price explosion and
congressional information-gathering on the subject.
RIN prices surged during the winter, zooming from a penny a
gallon in December to more than $1 in March. Credits changed
hands late last week at round 70 cents. U.S. law requires that
biofuels like ethanol be blended with motor fuels. The cost of
ethanol therefore plays a role in the final price of gasoline.
"That's quite a rise (in prices). It doesn't seem to me
that's the marketplace," said Grassley, whose home state is the
top producer of corn and ethanol.
Grassley suggested derivatives market regulators, such as
the Commodity Futures Trading Commission, should look into the
RIN is the abbreviation of Renewable Identification Number,
a numeric code that the law requires producers or importers of
renewable fuels to generate. RINs can be used by petroleum
refiners to prove compliance with the federal law to mix ethanol
The oil industry says the ethanol mandate and a decline in
gasoline demand is the cause of the surge. They say it will be
impossible to meet ethanol targets at current gasoline
consumption rates, so RINs become vital. Ethanol makers say the
amount of fuel involved is too small to affect fuel prices.
Last week, the chairman of the Senate Energy Committee asked
the U.S. Environmental Protection Agency for more information
about RIN prices, including the names of the largest
non-physical holders of the credits, including traders, brokers
and hedge funds.