Sept 15 Wall Street banks, including JPMorgan
, have engaged in speculative trading and stockpiled U.S.
renewable fuel credits turning a federal environmental program
into a profit stream, The New York Times reported on Sunday.
A JPMorgan trader pressed the bank to buy all the Renewable
Identification Numbers (RINs) it could, The Times said citing an
unnamed industry executive. Prices for the credits spiked by as
much as 20-fold between January and mid-summer.
The Times reported that JPMorgan's role and that of other
banks in the RINs market has hurt U.S. refineries that often
must acquire RINs to avoid stiff penalties from the U.S.
Environmental Protection Agency (EPA). The banks' trading in the
RINs market likely contributed to higher gasoline prices at the
pump, the report said.
With the supply of available RINs growing tighter, JPMorgan
offered to sell hundreds of millions fuel credits to refiners
this year, The Times reported.
JPMorgan spokesman Brian Marchiony told Reuters by email
that the bank did not offer to sell that volume of fuel credits
and holds only a "marginal" inventory of RINs, or just enough to
comply with its own requirements in the fuel market.
Throughout 2013, Marchiony added, the bank's RINs inventory
has never a exceeded an estimated 0.001 percent of the total, 14
billion gallon ethanol RIN market.
U.S. refiners and gasoline importers must generate or buy
RINs to comply with EPA rules requiring they blend growing
quantities of ethanol into gasoline supplies. RINs prices spiked
from 7 cents in January to a high of $1.43 this summer, before
retreating to 60 cents, the newspaper said.
The price spike has saddled U.S. refineries with huge bills
and refiners have passed along the higher costs to consumers,
the report said.
Independent refiner Valero Corp estimated that its
cost to acquire RINs would skyrocket to $800 million, The Times