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Rally in RIN prices drives the cost of compliance higher through Q3 2016

Refiners and wholesalers are reporting huge increases to the cost of compliance in Q3 2016, mainly driven by the rally in RIN prices through the quarter. Smaller refiners have recently complained that they are purchasing RINs at extremely high prices, leading to a huge increase in their cost of compliance this year. D6 ethanol RIN prices soared through Q3 2016, with the average RIN price pegged 15% higher than the average D6 RIN price in Q2 2016.

Valero reported a $104 million increase in the cost of compliance in Q3 2016 compared to the same period last year, mainly due to the increased cost of purchasing RINs. Valero expect the cost of compliance for the whole of 2016 to be between $750-850 million.

Meanwhile, PBF energy, one of the largest independent refiners in North America have also reported a huge 15% increase in the cost of compliance in Q3 2016 compared to last year. “It was a challenging refining environment in the third quarter, with the exception of the Gulf Coast, average benchmark margins were down in every region and we experienced the added headwind of a 15 percent increase in the cost of compliance with the renewable fuels mandate.”  Tom Nibley, Chairman and CEO of PBF Energy said.

NB 1/11/2016

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