Following recent reports of price manipulation of renewable fuels identification numbers, chairwoman of the Senate Agriculture Committee Debbie Stabenow, D-Mich., Tuesday called on the Commodity Futures Trading Commission to investigate the issue.
Stabenow explained that RINs – which are tracking numbers that are used to ensure blenders and refiners are meeting their obligations under the renewable fuel standard – have been subject to extreme price volatility as of late. In a letter to CFTC Chairman Gary Gensler, Stabenow suggested that a full review be completed to determine if the volatility is being cause by factors other than supply and demand.
"I am concerned that a lack of transparency in these markets has made them more susceptible to manipulation," Stabenow wrote. "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. To this end, I ask that you coordinate with the Environmental Protection Agency to achieve these important objectives," she said.
The request is part of a larger discussion about the future of ethanol blending and the "blend wall" – a cap on the amount of ethanol that can be blended into traditional fuels, thereby making mandated ethanol production higher than what is needed in the marketplace. In turn, because of compliance concerns, some say that cap is boosting RIN demand and driving prices higher.
Also hanging in the balance and adding an element to the discussion is both the pending release of EPA's 2014 RFS volume requirements and the reauthorization of the CFTC itself.
Seemingly speaking to the reauthorization issue, Stabenow suggested in the letter that if there are limits to the ability of the CFTC to police the markets, officials should inform the Committee.