Oil companies could be blending more ethanol with gasoline, but use deceptive practices to avoid doing so, according to Bob Dinneen, president of the Renewable Fuels Association. The issue centers around Renewable Identification Numbers (RINs), a type of credit refineries can use to comply with the Renewable Fuels Standard (RFS).

The RFS sets mandatory blend levels for renewable fuels, with the target increasing annually. The RFS for 2013 is 16.55 billion gallons. By 2022, the RFS grows to 36 billion gallons.

According to the Renewable Fuels Association, a RIN is produced when a gallon of renewable fuel is produced. Oil companies can then split the RIN from the gallon when they buy the gallon of renewable fuel and sell it on the open market. Oil companies can either buy a gallon of renewable fuel to comply with the RFS or buy a RIN credit on the open market.

Listen to "The Ethanol Report" podcast for more information about a RIN.

The RIN market in recent weeks has experienced considerable volatility, with prices ranging from 7 cents to over a dollar. Oil refiners claim the cost of RINs is driving up the cost of gasoline, and point to the volatility in RIN prices as a reason to end the RFS.

Dinneen refutes that claim, saying oil companies are purchasing RINs and trading them amongst themselves instead of blending more ethanol. The RIN credits were established to provide flexibility when renewable fuels were short in supply and high in cost, he says, but today there is a surplus stock of ethanol at a price about 70 percent that of gasoline. According to the USDA’s most recent National Weekly Ethanol Summary, ethanol prices currently average around $2.60 per gallon, while the U.S. Energy Information Administration lists a national average gasoline price of $3.70 per gallon.

“We could produce more if refiners were willing to purchase it, and they would save more money,” Dinneen says, adding that volatility in RIN market cannot be explained by market fundamentals. “There is no way the opaque marketplace for RINs is driving up the price of gasoline today.”

Dinneen says oil companies are needlessly and irresponsibly using RIN credits to turn public opinion against the RFS, which he says has been very successful. The RFS, he says, has helped reduce U.S. reliance on foreign oil, lowered gasoline prices for consumers, reinvigorated rural America and spurred innovation in alternative fuels.

For more information about RINs and the ethanol industry, visit the RFA website at EthanolRFA.org.