With the exception of two short periods in late 2013 and the first quarter of 2014, when winter-related logistical bottlenecks drove up ethanol prices, spot ethanol prices have consistently been lower than gasoline prices from December 2011 through October 2014. However, with the sharp decline in crude oil and gasoline prices in the latter months of 2014, gasoline spot prices fell below ethanol spot prices in early November. For most of December through mid-January, ethanol was priced about 30 cents per gallon more than wholesale gasoline; since that time, the gap between the spot prices of ethanol and gasoline has narrowed.
In considering how the relationship between ethanol and gasoline prices affects the incentive to blend ethanol into gasoline, it is important to take account of the value of Renewable Identification Numbers (RINs) associated with each gallon of ethanol that is blended into gasoline. RINs were introduced as a compliance mechanism for the Renewable Fuel Standard (RFS) program administered by the Environmental Protection Agency (EPA) under laws enacted in 2005 and 2007. There are several types of RINs that can be used to demonstrate compliance with goals established for different categories of renewable fuels by the RFS program. In recent years, the D6 RIN, primarily generated via corn ethanol production, has increased in value during times of higher RFS target announcements or impending compliance deadlines.