Pruitt may limit ethanol market traders

Environmental Protection Agency (EPA) Administrator Scott Pruitt is considering taking action to limit what he sees as speculative trade of ethanol credits in an effort to keep prices down.

Pruitt told reporters that one idea is to limit who can trade the credits that some refiners have to buy to comply with the federal ethanol mandate.

“There’s some things on the trading platform I think should happen no matter what,” Pruitt told reporters at EPA headquarters Monday, according to the Houston Chronicle.

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“There seems to be a hoarding of [Renewable Identification Numbers], which inflates the price of RINs. Some have talked about limiting the participants who buy and sell, so you can get away from some of the speculation that’s taking place.”

The Renewable Fuel Standard (RFS), enacted by Congress in 2007, requires refiners to blend certain volumes of ethanol and other biofuels into their traditional fossil fuels.

Refiners who cannot blend biofuels have to purchase credits from others. But those credits can be traded on a market that some refiners have complained is too speculative, in which prices fluctuate greatly.

Reforming the credit program has been a top request of refiners and their allies in recent months, particularly after a major Philadelphia refiner declared bankruptcy in January, blaming RIN costs.

President Trump has told Republican senators that he would be open to reforms that lawmakers from the various sides of the issue would support.

Sen. Ted Cruz (R-Texas) has proposed capping the price of the credits, but lawmakers from corn states have opposed that approach.

Pruitt also told reporters that he supports letting fuel stations sell higher ethanol blends in the summer than they are currently allowed to, but only if such a change can withstand legal challenges, according to the Chronicle.