The Advanced Ethanol Council (AEC) is working to stamp out RIN illiteracy, offering an education to the media on just what the compliance credits are and how they work under the Renewable Fuel Standard (RFS).

AEC sent a response entitled “RIN Credits for Dummies” to a recent Wall Street Journal editorial which argues higher prices for RIN compliance credits are driving up the price of gasoline.

In the spirit of educating, AEC pointed out the very basic facts about RIN credits and how they work, such as:

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.

According to AEC, “oil companies have indeed bid up the price of RINs over the last few weeks, but they are doing so voluntarily to avoid the alternative of adding more ethanol to gasoline.”

Renewable Fuels Association (RFA) president and CEO Bob Dinneen says oil companies have essentially “gone on strike” by refusing to move to higher ethanol gasoline blends. “The RIN program was designed to meet any shortages of renewable fuels, not to allow oil companies to avoid blending ethanol with gasoline,” Dinneen wrote in a blog post today.

Also on the RFA E-xchange Blog, VP for research and analysis Geoff Cooper provides a good primer on RINS called Stop the RINsanity. Cooper walks through the math of RINS and gas prices and calculates that even in the worst case scenario for RIN pricing, ethanol-blended gasoline still saves consumers money.

“If RIN prices average $0.80 and the ethanol discount to gasoline averages $0.58 per gallon, and if both impacts are fully passed through to retail, E10 would still be $0.05 per gallon cheaper than unblended gasoline,” Cooper concludes.