RIN Pass-Through at Gasoline Terminals

RIN Pass-Through at Gasoline Terminals. Pouliot, S., Smith, A., & Stock, J. H 2017.

Wholesale suppliers at fuel terminals blend gasoline with ethanol to create finished gasoline. Under the US Renewable Fuel Standard (RFS), this blending activity is subsidized through a renewable fuel credit, known as a RIN. We estimate whether these suppliers, known as rack sellers, pass through the value of RINS. We find complete pass through in some locations and settings and not others. We argue that the incomplete pass-through we find stems from lack of salience about how the subsidy affects rack margins. If rack sellers have price-setting power in the RIN market, which is plausible, then the incomplete pass through we find creates an incentive for them to drive up RIN prices thereby raising compliance costs.

@article{pouliot2017rin,
  title={RIN Pass-Through at Gasoline Terminals},
  author={Pouliot, Sebastien and Smith, Aaron and Stock, James H},
	url={https://www.dropbox.com/s/52yzs17hksxe0z9/Pass-through_Latest.pdf?dl=1},
	abstract={Wholesale suppliers at fuel terminals blend gasoline with ethanol to create finished gasoline. Under the US Renewable Fuel Standard (RFS), this blending activity is subsidized through a renewable fuel credit, known as a RIN. We estimate whether these suppliers, known as rack sellers, pass through the value of RINS. We find complete pass through in some locations and settings and not others. We argue that the incomplete pass-through we find stems from lack of salience about how the subsidy affects rack margins. If rack sellers have price-setting power in the RIN market, which is plausible, then the incomplete pass through we find creates an incentive for them to drive up RIN prices thereby raising compliance costs.},
	keywords={energy},
  year={2017}
}

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