PRLog (Press Release)
- Jun. 7, 2012 -
Little Rock, AR: Jess Hewitt, Chairman of Gulf Hydrocarbon and the RIN expert consultant for Lee Enterprises Consulting, is advising obligated parties to overbuy their volume obligation requirements in order to have sufficient RIN inventory with which to immediately replace RINS which could later be invalidated. Hewitt says that his advice is based on the EPA’s decision to seek fines against obligated parties for the use of invalidated RINS. “Waiting to replace the RINS until after being notified by the EPA is somewhat risky,” says Hewitt. “By doing this, the obligated party would subject itself to two types of fines – 10 cents per RIN for having invalid RINS and another 20 cents per RIN for not having a sufficient amount”. Hewitt says that with the currently low price of RINS, overbuying seems like a good insurance policy. “RIN prices dropped more than 10 cents so now appears to be an excellent time to purchase 2012 and 2011 RINS at a low price.”
Based on the per RIN fines, an obligated party can buy extra RINS to hold in reserve for the unlikely event that RINS become invalidated. According to recent EPA announcements, the agency will allow a time period to pass between announcing invalid RINS and sending notice of violations to obligated parties. During this time period the obligated party can immediately replace the RINS from its inventory and issue revised reports to the EPA. All this can be done without entering the RIN market - at the same time other obligated parties are buying replacement RINS.
Hewitt also notes that Lee Enterprises Consulting will likely have a “major announcement”
next week with respect to RIN verification, and that the announcement will likely “relieve quite a bit of the pressure” now surrounding RIN purchasing for obligated parties.
“RFS2 clearly requires obligated parties - refiners and importers – to purchase renewable identification numbers in order to show their compliance with the standard,” says Wayne Lee, CEO of Lee Enterprises. Last year the EPA uncovered two instances of people producing RINS without producing any biodiesel. This year, a third instance was uncovered. The EPA’s invalidation of these RINs has caused obligated parties great concern in purchasing RINs. Lee notes that this hesitation on the part of obligated parties has taken a major toll on small biodiesel producers.
“I agree with Jess (Hewitt’s)
strategy that overbuying is a good idea, especially at current prices,” says Lee. “Furthermore, I expect our announcement next week to alleviate the problems and make producers, obligated parties, the National Biodiesel Board and the EPA quite happy.
ABOUT GULF HYDROCARBON:
Gulf Hydrocarbon, Inc. is the premier provider of biodiesel to the petroleum industry. Chairman, Jess Hewitt, has over 30 years’ experience in the energy industry and is a consultant with Lee Enterprises Consulting, Inc. Hewitt is a former member of the National Biodiesel Board and past Chairman of its Marketing Committee. Hewitt served as President of the Biodiesel Coalition of Texas and on the advisory board for the New York Mercantile Exchange (NYMEX). He is a member of the ASTM committee governing petroleum products/biodiesel. Hewitt is a top authority on RINS, and directs Lee Enterprises Consulting’s RIN trading, distribution logistics, product marketing, and feedstock hedging.
ABOUT LEE ENTERPRISES CONSULTING, INC.: Lee Enterprises is a biodiesel consulting firm specializing in project oversight & management, feasibility studies, grants, business plans, and assistance with planning, market analysis, site evaluation, feedstock selection and procurement, process technology, evaluation, offtake distribution, RINs, financing, capital budgeting, cold soak, filtration, personnel, and contract negotiations (for feedstock, off-take, transportation, construction, site purchase/lease, and plant management). The group also owns National Business Brokerage, Inc., a full service business brokerage firm specializing in the buying and selling of biodiesel plants. Lee Enterprises, 1503 East Kiehl Ave., Sherwood, AR 72120. (501) 833-8511.