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. An article by The Hill is 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.
