RIN Markets Have Been A Political Football For Their Entire Existence

Energy futures are ticking up about 1% to start Friday’s session and have earned back about half of last week’s losses in a choppy week of trading so far. Thursday was another see-saw trading day for markets that continue to wait and wonder on a handful of topics from the spreading wars in the Middle East and Ukraine, China’s economic stimulus and the upcoming elections in the US.

A Reuters article this morning highlights how some energy companies are backing one presidential candidate, while hedging their bets through the other’s policies.

Political uncertainty has always been a major factor in the various made-up environmental credit markets, and that has been evident again this week as both LCFS and CCA values in California have dropped sharply after lawmakers have put pressure on CARB to clarify their plans on those programs. Both the Cap & Trade and LCFS impact on fuel prices has become more obvious in the wake of recent plans to force refiners to hold minimum inventory levels, and the subsequent news that yet another of those refiners is shutting down. Washington state meanwhile will see a ballot measure on election day that could possibly repeal their “Cap and Invest” program.

RIN markets have been a political football for their entire existence which is now approaching the 20 year mark. The recent recovery in those values to trade near their highs of the year is seen by many as a sign of the recent reduction in renewables production by those hemorrhaging cash while trying to turn vegetables into diesel fuel, while there’s also some indication that the higher RIN values are following bets that democrats will maintain control of the EPA for another 4 years.

Another front in the fight? Turkey’s airforce struck an oil refinery in Syria Thursday, as the country steps up attacks against Kurdish militants. The impacts on global energy markets will be minimal given that Syria is not a major producer or exporter, but it’s yet another harsh reminder that peace in the world’s key exporting region is probably not happening any time soon.