Biomass-based diesel RIN prices have reached a new high, trading today at $1.20, and some say there is no indication that those prices will drop for the next several months. With the current trading price, combined with the dollar blender's credit, this brings the amount that can be taken off the price of a gallon up to $2.80.
According to Gray, the volatility in the market is due to a number of factors. One factor is because the fuel is just not making it to the market in blended form. Because the amount of spot product is currently considered low, required parties are buying RINs on a forward basis to guarantee that they are meeting compliance throughout the year.
Another factor leading to the high RIN prices, Gray noted, is that because the reporting period for 2010 ends on Feb. 28, several parties are buying up all they can to ensure they don't carry over a deficit into 2011.
While the current RIN prices are trading at more than a dollar based on the efforts by obligated parties to ensure they have a ratable RIN value for the second half of the year, and to ensure there is no deficit carried over into 2011 following 2010, Gray said prices will linger at or above the current value because data showing the market truly is short is not available yet.
