WASHINGTON, Sept 25 (Reuters) - A U.S. senator is pressing the Environmental Protection Agency to release more information on the market used to trade biofuel credits, known as RINs, after suggestions of manipulation by Wall Street banks.
“I’m concerned about recent reports of manipulation or exploitation of the RIN market,” Charles Grassley, an Iowa Republican, said in a letter to U.S. EPA administrator Gina McCarthy.
“Allegations that the opaqueness of this market is leading to abuse and exploitation by individuals or firms simply to generate profits at the expense of refiners, other obligated parties, and perhaps consumers is troubling,” Grassley said.
Grassley is the second senator this week to raise alarm about the biofuel credits trading system.
RIN trading was created as a way to help refiners comply with their obligation under U.S. law to blend a certain amount of renewable fuels, such as corn-based ethanol, into their gasoline and diesel supplies.
Grassley, who represents the largest U.S. corn producing state, is a long-time supporter of that law, the Renewable Fuels Standard.
On Monday Debbie Stabenow, head of the Senate Agriculture Committee, asked U.S. futures regulators to investigate whether there was manipulation of the price of the credits, the formal name of which is Renewable Identification Numbers.
The EPA oversees the biofuels standard.
Grassley asked the agency to respond to questions about the RIN market in eight broad areas, including whether it is working to modify the trading system and whether the EPA has a strong enough oversight network to prevent abuses.
“The EPA needs to provide assurances that this market is functioning for its intended purpose, rather than acting as a profit mechanism for Wall Street banks and other financial institutions,” he said.
Prices of RINs have been high and volatile this year, soaring from a few cents each in January to almost $1.50 in July to about 50 to 70 cents this month.
Banks, including JPMorgan, have traded large volumes of RINs this year, the New York Times said in a Sept. 14 article that tied the trading to rising RIN prices. JPMorgan said it holds only a “marginal” amount of RINs so it can meet its own obligations in the fuel market.