Valero says RFS compliance costs are soaring; renewable industry snaps back “poor capacity planning”
In Texas, Reuters is reporting that “Valero Energy expects to get hit with a half-billion-dollar bill in the second half of the year” and the news agency attributed the costs to “the rising cost of meeting government mandates to blend biofuels.”
The newsgroup reports that Valero’s cost to utilize mandated renewable fuels will rise to a figure of $750-$850 million. Valero made the remarks in filing its Q2 financial results.
“Valero knows full well,” a source told The Digest, “that they pay nothing for RIN credits when they buy ethanol and blend fuels. Those are delivered to them free of charge when they buy a gallon of fuel. In fact, Valero is one of the largest generator of RIN credits through its own ethanol production program. If they find themselves short on RINs, it’s because they did not add enough renewable fuel production capacity, buy enough fuel or stockpile enough RINs. Look for example at Valero’s E85 pricing in Iowa. They are selling E85 as of this week, at 76% above the price of their lowest-priced competitor. No wonder they are having trouble distributing ethanol and have to buy RINs for compliance.”
Meanwhile, Reuters said that it spent $334 million in renewable fuel credits in the first half of 2016, and expected this cost to rise to $516 million in the second half. Last year, Valero said it spent $517 million in 2015.
Category: Fuels
