Posted September 30, 2013
Senator Debbie Stabenow (D-MI), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, called on the Commodity Futures Trading Commission (CTFC) to review allegations of possible manipulation of the markets for Renewable Identification Numbers (RINs), according to a press release, available here.
In 2007, Congress passed the Renewable Fuel Standard, which required refiners to blend a certain amount of ethanol and other biofuels into the nation’s gasoline supply each year. RINs are assigned to ethanol-blended fuels which meet the requirements of the Renewable Fuel Standard. RINs are “tradable credits tied to each gallon of ethanol to show compliance with the law.” For a detailed discussion of RINs, please visit the National Agricultural Law Center’s website here.
Amid recent reports of possible manipulation in the RINs market, Stabenow has asked the CTFC, which oversees markets for commodity futures, options and swaps, to investigate these allegations.
In the letter, Stabenow wrote: “I would like the CTFC to help determine whether factors other than supply and demand have been causing extraordinary volatility in the price of RINs and to what extend fraud and manipulation have been affecting the price of RINs.” She continued, “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…While I support an actively traded market with a diverse array of market participants, the market must function and allow entities to manage their risk and comply with the law.”
The unregulated RINs market has experienced volatility and dramatic price spikes recently. According to a New York Times article, available here, JPMorgan has been accused of stockpiling RIN credits and manipulating the market. Industry “executives familiar with [JPMorgan’s] activities in the RINs market said they were told by a top banker in its commodities operation about the stockpiling.”
A spokesman for JPMorgan “disputed the account, saying the bank does not trade ethanol credits for a profit in the way it trades other securities, but is registered to deal in credits through its energy business.”
For more information on the Renewable Energy, please visit the National Agricultural Law Center’s reading room on the subject, here.
Share: