Study finds RIN price cap, E15 deal would lower price of corn

Any action to artificially cap Renewable Identification Number (RIN) prices in exchange for a Reid Vapor Pressure waiver allowing year-round sale of E15 would result in reduced ethanol consumption, a drop in corn prices, and an effective cut of 5 percent to the Renewable Fuel Standard (RFS) conventional renewable fuel requirement, according to a study by the Center for Agricultural and Rural Development (CARD) at Iowa State University, the Renewable Fuels Association said today.

The RFA noted that the CARD analysis was released following President Donald Trump’s meeting last week with ethanol and oil industry stakeholders, including members of the Renewable Fuels Association, to discuss the RFS and RINs. Sen. Ted Cruz, R-Texas, has proposed capping RIN prices at 10 cents, potentially in exchange for an RVP waiver for E15, RFA noted.

Cutting the RIN prices would cause corn prices to drop in the short run by about 25 cents per bushel, the study found.

“The study confirms imposing a price cap on RINs would abrogate the potential benefit of RVP parity for E15. Fundamentally, a RIN price cap and E15 RVP parity work at cross purposes. One is intended to grow demand for biofuels; the other is intended to reduce demand. The net result would be an effective cut to the RFS, lower ethanol production, lower corn prices, and higher consumer gasoline prices,” said RFA President and CEO Bob Dinneen.

–The Hagstrom Report