Ethanol RIN Values Jump to Record 53 Cents, Blue Ocean Says

The value of Renewable Identification Numbers for corn-based ethanol rose to a record on concern that biofuel production and consumption won’t meet U.S. targets.

Prices for RINs, the credits that help the Environmental Protection Agency track whether refiners are meeting federal biofuel-use mandates, jumped to 53 cents from about 45.5 cents yesterday, according to Blue Ocean Brokerage LLC in New York.

Ethanol production has dropped 16 percent to an annualized rate of 12.4 billion gallons last week from a record in December 2011, a government report showed today. That’s short of the 13.8 billion refiners are required to use this year. Falling gasoline demand plus higher ethanol consumption targets is known as the “blend wall.”

“There is some concern that the combination of low ethanol production this year with the potential to hit the blend wall next year could result” in a shortage of RINs, said Michael Breitenbach, an analyst and trader at Blue Ocean.

Refiners can use the credits in lieu of blending a physical gallon, according to Geoff Cooper, vice president of research and analysis at the Renewable Fuels Association, a Washington- based trade organization.

The government wants U.S. refiners to use escalating amounts of ethanol in gasoline, up to 15 billion gallons by 2015. That comes as consumption of the motor fuel shrinks.

Higher Levels

Ethanol industry advocates have pushed for higher concentrations of the biofuel in gasoline, to 15 percent, a level also called E-15, from 10 percent to help meet targets.

The EPA said in 2011 it would allow the higher blends at filling stations for cars made after 2001. Organizations including the American Petroleum Institute have called for more testing and last week said that they petitioned the U.S. Supreme Court to overturn the EPA’s decision.

“Everyone is really worried that E-15 is not going to kick in and gasoline demand is going down,” said Beatriz Pupo, an analyst at Kingsman SA, a Lausanne, Switzerland-based sugar and biofuels research firm. “Everybody’s anticipating that they will need more RINs because they won’t have enough physical production.”

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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