This is my last planned post on the RFS point of obligation. Here are my observations from the previous eleven posts plus some thoughts not directly covered in those posts. Some of these observations should be applicable to regulating CO2 and other greenhouse gases.
Well, as a matter of fact and law, there is. In “Why mess with it?,” I listed a future post on the illegality of the RFS obligated party definition/point of obligation. Until now, I avoided legal citations and discussion. No longer. I’ll keep law-speak to a minimum.
The definition of obligated party and, therefore, the RFS point of obligation are illegal because exempt gasoline blenders, Read more “There Oughta Be a Law!”
In “Why mess with it?”, I promised to compare the RFS trading program with the highly successful gasoline sulfur and benzene programs. RIN trading does not and, indeed, cannot measure up to the other two programs in terms of ease, efficiency, cost or any other compliance metric. Why?
The November 2, 2017 post, “Why mess with it?” promised to address this issue:
how not obligating blenders creates a perhaps insurmountable headwind to increasing biofuel blending volumes.
In my February 5 post, “Prove It”, I explained rack prices show a refiner’s BOB-related RIN expense is not fully passed through to the BOB purchaser. For Big Oil refiners receiving free RINs, this is no big deal and, in fact, any pass through at all is a detriment to the overall Big Oil enterprise. Read more “Prove It Redux”
Thus far, previous posts have explained the following ideas. First, the current RFS point of obligation supplies Big Oil with free RINs. Second, those free RINs prevent full recovery of merchant refiners’ RIN expenses in the spot market. Third, this incomplete pass through unjustly Read more “Prove It”
Until now, I have posted on the bulk or spot market dynamics between Big Oil, merchant/independent refiners and non-refining marketers: how Big Oil’s free RINs prevent merchant and independent refiners from fully recovering RIN expenses. Further downstream at the wholesale rack, Read more “FUBAR”
. . . will not come to Muhammad, then Muhammad must go to the mountain.” A recent investment note by Wells Fargo Securities reminded me of this maxim, often attributed to Fancis Bacon, Chapter 12, Essays, 1625. I originally intended this post to discuss Big Oil’s free RINs screwing up competition at the wholesale rack. The note, however, gave me pause. I needed to re-examine my conviction RIN prices are not fully passed through to bulk fuel purchasers and, consequently, the wholesale rack. Read more ““If The Mountain . . .”
That was Marie Antoinette’s notorious and callous response when told the peasants had no bread. Well now, such sage advice this is: when the current situation is unbearable, one simply chooses another equally impossible alternative while others look on in self-righteous judgment at your complaint and failure. Likewise, current point of obligation defenders are saying of merchant refiners, “Let them be blenders”. Read more “Let Them Eat Cake”
Refining and Marketing
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That’s right. For Big Oil, Inc., the parent company of Big Oil Refining and Big Oil Marketing, and, in fact, for all marketers, RINs are free, not costing a single cent. For merchant refiners, Big Oil’s competing bulk fuel suppliers, RINs are a major expense often exceeding labor and second only to the cost of crude oil supplies. Current point of obligation supporters argue merchants could have free RINs, too, if they would just suck it up and blend. I’ll address this entitled fantasy in another post. Today’s post explains how EPA’s point of obligation grants free RINs to Big Oil, Inc. but not to merchant refiners and thereby corrupts competition in the bulk fuel supply market.