Senate Agriculture Committee chair Debbie Stabenow (D-MI) is asking the Commodity Futures Trading Commission (CFTC) to review allegations of manipulation in the markets for Renewable Identification Numbers (RINs), the tracking mechanism to ensure petroleum blenders and refiners meet their requirements under the Renewable Fuels Standard.
Press reports have highlighted potential speculation and manipulation of the unregulated markets, possibly contributing to recent market volatility and spikes in price.
“I would like the CFTC to help determine whether factors other than supply and demand have been causing extraordinary volatility in the price of RINs and to what extent fraud and manipulation have been affecting the price of RINs,” Stabenow wrote to CFTC Chairman Gary Gensler. “I am concerned that a lack of transparency in these markets has made them more susceptible to manipulation. If this is the case, it is a problem that must be identified and fixed.”
Jim Miller, vice president and chief economist with Growth Energy, notes that RINS were something the oil industry requested when the RFS was being drafted to provide flexibility. “But there has been what appears to be some gaming, both in terms of speculation, as well as hoarding of RINS,” he said in an interview today with Domestic Fuel. “I think it’s interesting that the price of RINS skyrocketed just about the same time that the House was holding hearings on the RFS.” Since that time the price of RINS has dropped to about a third of what it was earlier this year. “That seems to me to be a bit odd,” he added.
“The implication for world consumers is clear… [T]he US renewable fuels program has cut annual consumer expenditures in 2013 between $700 billion and $2.6 trillion,” writes Verleger in a short commentary available on pkverlegerllc.com. “This translates to consumers paying between $0.50 and $1.50 per gallon less for gasoline.” The commentary summarizes a more detailed analysis that was included in Verleger’s August Petroleum Economics Monthly newsletter.
Crude oil prices would be between $15-$40 per barrel higher today without the substantial volumes of ethanol that have been added to petroleum inventories since enactment of the RFS. According to the commentary, the RFS today has added “…the equivalent of Ecuador’s crude oil output to the world market at a time of extreme tightness.”
The analysis credits in large part the Renewable Fuels Standard (RFS) that has helped keep higher commercial crude oil inventories, and thus, prices lower.
Now more than ever our industry should be proud of its success in bringing down barriers that limit our production and use, and which have resulted in noticeable reductions in demand for fossil fuels and imports, expanded markets around the world for both fuel and food, and consumer choice for renewable, domestic fuel options. We have answered the call with the introduction of E15, a proven fuel that is cost-effective for both consumers to use and retailers to install and provide. We see continued growth in E85 due to positive economics, and opportunities for advanced ethanol have never been brighter as the Renewable Fuels Standard (RFS) rises steadily over the coming years.
This is one event you sure don’t want to miss, as more than 1,200 attendees are expected for the two days chocked full of valuable, impactful ethanol expertise and numerous networking opportunities. Click here to register.
Six new E15 stations will give North Dakota drivers more choices at the pump. The Renewable Fuels Association welcomed the move at the six Petro Serve USA locations in Bismarck, Mandan, West Fargo, and Fargo, as North Dakota becomes the ninth state to offer E15 to consumers with vehicles 2001 and newer.
“We are committed to offering our customers choice at the pump,” says Kent Satrang, CEO of Petro Serve USA. “Ethanol blends are the perfect partnership between North Dakota’s corn fields and oil fields. E15 provides a very cost-effective option for our consumers.”
E15 is EPA tested and approved for all vehicles 2001 and newer. It has been offered for over 14 months and has been driven over 40 million miles. E15 is shown to save drivers an average of 10-15 cents per gallon compared to gasoline without ethanol. With the addition of the six North Dakota Petro Serve USA locations, E15 is now available in more than 40 stations in nine states.
“North Dakota drivers now have additional, cost-saving options at the pump,” said Robert White, Renewable Fuels Association’s director of market development. “A recent Fuels America poll showed that 82% of Americans want E15 to be available at the gas station. It is tremendous to see stations in state after state begin to offer E15 and I hope this trend will continue in North Dakota as other stations see the success of the six Petro Serve USA stations. The spread of E15 is only beginning and I am proud that North Dakota is helping lead the way in E15 implementation.”
E15 is a natural fit for the state, as the North Dakota Ethanol Council points out ethanol plants in the state contribute approximately $640 million/year to the economy, and they directly create nearly 200 in-state jobs and indirectly support 10,000 more. Plus, ethanol is made from local grain and creates a high protein feedstock, dried distiller grains (DDGS) for local farms.
Understanding what the auto industry wants and needs… and how ethanol can meet that… all while battling Big Oil and even the government… that’s the daunting task the ethanol industry has been facing for some time.
In this edition of the Domestic Fuel Cast, we talk with Dave Vander Griend, the co-founder and president of one of the world’s largest ethanol plant engineering and construction firms, ICM. He talks about how first the ethanol industry needed to identify what the auto industry needed and then what the refineries were producing, a first on both counts for the ethanol industry. He says once his industry was able to see what the car makers wanted, it was easier to figure out how to counter some of the arguments Big Oil has been making against ethanol.
Meanwhile, the Urban Air Initiative, a group that looks to reduce the threat to public health posed by petroleum-based fuels, issued a white paper, dispelling Big Oil’s myths and countering what the group characterizes as an erroneous report from the U.S. Environmental Protection Agency (EPA) that would hurt ethanol.
Corn production is forecast at 13.8 billion bushels, up less than 1 percent from the August forecast and up 28 percent from 2012. If realized, this will be a new record production for the United States. Based on conditions as of September 1, yields are expected to average 155.3 bushels per acre, up 0.9 bushels from the August forecast and 31.9 bushels above the 2012 average. If realized, this will be the highest average yield since 2009.
“The ear count numbers are a lot higher than what we were looking at just a month ago,” said USDA Economist Joe Glauber. “We’re expecting prices to fall, for ending stocks to recover a lot from where they were.” USDA is now predicting an average price for 2013 of $4.80 per bushel, about $2 less than year.
“It is a huge improvement over last year when we produced less than 11 billion bushels,” said Geoff Cooper with the Renewable Fuels Association who said lower prices will help increase ethanol production next year. “As this new crop comes in and corn prices come down, it’s very likely we could see close to 14 billion gallons in production next year,” compared to just over 13 billion expected this year.
Brian Jennings of the American Coalition for Ethanol (ACE) noted that a record corn crop on the heels of the worst drought in 50 years “is further proof the Renewable Fuel Standard (RFS) is working and Congress should not repeal or reduce it.”
The corn harvest is just beginning in some areas this week but should be getting into full swing in the next few weeks as the crop hits maturity.
This edition of “The Ethanol Report” features an interview from Farm Progress Show with Renewable Fuels Association Vice President of Research and Development Geoff Cooper on several timely topics, including corn and ethanol production this year, cellulosic ethanol, the importance of the RFS, and sales of E15 ramping up again as summer volatility requirements end.
Cooper talks about how despite a slow maturing crop and adverse weather conditions, USDA is still calling for a record corn crop of 13.8 billion bushels. He also discusses how retail sales of E15 will be going up again next week after the summer volatility requirements end on September 15.Ethanol Report with RFA's Geoff Cooper
“We are the 60 hard working employees of an independently owned and operated corn bio-refinery in Rochelle, Illinois,” they wrote, asking to correct misinformation about the RFS that was presented during a House Energy hearing in July. “The RFS is not a mistake and is in no way ‘unworkable.’”
The letter points out that “there is no ‘blend wall’ problem,” that E15 is safe for 2001 and newer vehicles, there is no food versus fuel problem, and that “EPA already has adequate regulatory flexibility” to adjust volumes of biofuel production requirements under the RFS.
“In fact, not only is the RFS workable and in no need of legislative changes, it actually should be recognized for having accomplished precisely what it was intended to do,” they add, asking their representatives to “do the right thing” and support the law as written.
Read the letter here.
There’s an old Chinese proverb that’s also considered a curse: “May you live in interesting times.” This morning, members of the Growth Energy Advocacy Conference in Washington, D.C. heard that from Secretary of Agriculture Tom Vilsack, as he explained how it’s “interesting” that Congress seems to have its priorities turned around, with lawmakers working to change Renewable Fuel Standard (RFS) while doing nothing to pass a farm bill.
“We believe (the RFS) is working,” said Vilsack, pointing to the EPA already making adjustments to reflect market conditions. “That’s the way it’s supposed to work. There’s no need for Congress to intervene in this.”
Vilsack says, in his opinion, the oil companies are behind the efforts to derail the RFS, mostly because they need the octane they get from ethanol but want to pay pennies on the dollar to get it. “What they (Big Oil) would really like to happen is for this industry (ethanol) not to succeed, so all those production facilities could be made available for 10 cents on the dollar. That’s what Big Oil’s interest is.”
Vilsack made the tie between the showdown with Syria, the RFS and the farm bill, as he looked at Gen. Wesley Clark, former NATO commander and Growth Energy co-chairman. “When and if Congress makes a decision to authorize military action, when and if the President implements that decision, who is going to implement it? It’s going to be a kid from rural America,” pointing out that rural Americans make up only 16 percent of America’s population but 40 percent of our military.
Vilsack urged Growth Energy members to send a strong message to Congress this week. “When you go and talk to your members of Congress to support the RFS, an additional message is, ‘We’ve been waiting a long time for the farm bill; don’t be sending our young men and women into harm’s way and not give them a decent opportunity back home. Get your work done.’”
Senate Majority Leader Harry Reid (D-NV) and Senate Agriculture Committee Chair Debbie Stabenow (D-MI) attended a press conference for the National Farmers Union in Washington on Monday to stress support for the Renewable Fuel Standard (RFS).
“We’ve learned a lot about biofuels, we’ve done so much better in producing biofuels for things other than crops that we eat and that’s important,” said Senator Reid. “I’m happy about how important our biofuels industry is.”
Senator Stabenow, pictured here with NFU president Roger Johnson, spoke on behalf of both passage of a new farm bill with an energy title and keeping the RFS in place.
“I am a huge proponent of the Renewable Fuel Standard, we need to continue to invest in research and development and energy efficiency,” Stabenow said. “It’s about getting us on to homegrown energy and off of foreign oil and it’s about jobs.”
Rocker Neil Young showed he has a “heart of gold” for ethanol during a press event in Washington D.C. Monday with the National Farmers Union.
“I love ethanol. I love how it smells, I love the way it makes my car go, everything about it is great, it’s clean,” said Young. “It’s a beautiful fuel.”
But, Young told an audience of 300 farmers and numerous media outlets, America does not have freedom of choice when it comes to its fuel. “There’s a monopoly in existence,” he said. “Every time you get off the road, you enter a monopoly zone – it’s called Big Oil. There’s no reason why every fuel stop that has more than four fuel pumps cannot have an E85 pump…it gives Americans the freedom to choose the fuel they use.”
Young, who recently traveled cross country in a vehicle powered by cellulosic ethanol and electricity, says he is not being paid to support biofuels. “We have a very big problem, CO2 is going to be a huge issue in the next couple of years,” he said. “Ethanol and other biofuels, cellulosic ethanol, biodiesel, are the answer to this problem.”
The Grammy-winning recording artist believes the misinformation campaign against ethanol is fueled by the oil industry. “And the only thing that’s green about their product is the money that goes into campaigns,” he said to strong applause from the crowd.
Young also encouraged those who support alternative fuels to contact their lawmakers and urge them to maintain the Renewable Fuel Standard (RFS).
Listen to some of Young’s comments here and watch the cell phone video sent by NFU staffer Melisa Augusto below: Neil Young for Ethanol
AgriTalk and Agri-Pulse will be hosting the debate via broadcast and the web on September 12 starting at 11:00 am Eastern time live from the Longworth Building, Room 1300. Participants will be RFA president and CEO Bob Dinneen and NCBA Vice President Government Affairs Colin Woodall.
“The Renewable Fuel Standard is decreasing our dependence on foreign oil, creating jobs, and revitalizing rural communities. I am all geared up to explain the facts and debunk the negative attacks,” Dinneen says. “It is an excellent time for this debate. USDA is expecting a robust corn crop and just last month USDA issued a report showing that food prices are rising at a slower rate than expected.”
“We appreciate the opportunity to discuss the Renewable Fuel Standard (RFS). America’s cattlemen and women are not opposed to renewable fuels; it’s the arbitrary mandate of their use that is at issue,” says Woodall. “This mandates places cattle feeders and the entire cattle sector on an un-level playing field for the finite amount of corn produced.”
Questions from AgriTalk and Agri-Pulse listeners and readers will be included in the debate led by Mike Adams and Sara Wyant. If you have questions on this topic, please submit them to Host@AgriTalk.com or to Sara@Agri-Pulse.com no later than Wednesday, September 11. The Agri-Pulse team will be live tweeting from the event @AgriPulse. Look for the hashtag #RFSdebate.
SURPRISE! Big Oil is spreading lies about ethanol, trying to compare the fuel to Canadian tar sands! I know you could just die from a lack of surprise on that one. But no surprise, the folks at the Iowa Renewable Fuels Association are not taking it lying down.
“The truth must be that, for whatever weird reason, [oil companies] raise more money attacking corn ethanol than they do attacking the Canadian tar sands,” fired back IRFA Executive Director Monte Shaw during the recent groundbreaking of the Quad County Corn Processors biorefinery in Galva, Iowa, ticking off how the tar sands use more water, produce more carbon and greenhouse gases, and take more energy to mine and ship the tar sands than corn ethanol. “To compare that to corn ethanol is just ridiculous. It does not pass the sniff test.”
Monte added that the Quad County Adding Cellulosic Ethanol (ACE) project, where a cellulosic processor has been bolted on to an existing ethanol plant, makes Big Oil nervous. Projects like this one are bringing out desperation in the oil companies, pointing out how more cellulosic plants are scheduled to come online in the coming months… and that means that much more share of petroleum’s monopoly on your gas tank will be going away.
“Big Oil has lost 10 percent of its market in gasoline to ethanol. They do not want to lose another 5 percent,” pointing out the billions of dollars on the line. Monte went on to say don’t underestimate just what oil companies will do to preserve their stranglehold on your wallet. “They’re wrong, but they’re not stupid.”
Monte went on to make sure that people know the truth when they hear the oil companies’ lies.
“We just have to work through all those falsehoods put out by Big Oil.”
The attacks on the Renewable Fuel Standard (RFS) by the oil industry just keep coming and Renewable Fuels Association (RFA) president and CEO Bob Dinneen was at the 2013 Farm Progress Show this week to talk about the latest – a petition for a partial waiver submitted recently to EPA by the American Petroleum Institute (API) and American Fuel & Petrochemical Manufacturers (AFPM).
In this “Ethanol Report” interview, Dinneen talks about RFA’s letter to EPA urging them to reject the waiver request. “API really doesn’t have standing to even file a waiver because they’re not an obligated party,” he says.