(In third paragraph, corrects amount by which RIN prices were lower in current quarter to $15 million.)
HOUSTON, April 25 (Reuters) - Valero Energy Corp Chairman and Chief Executive Joe Gorder said he expects costs for renewable fuel credits to drag on the company’s returns in the second quarter of 2017.
“While RIN (Renewable Identification Number) prices have declined relative to 2016, there is still a significant headwind for the quarter,” Gorder said in a conference call to discuss first quarter earnings. “At this level, RINs expense remain an issue for us, so we continue to work with regulators.”
Valero’s costs for biofuel blending were $146 million in the first quarter of 2017, $15 million below blending costs in the same period of 2016.
During the conference call, Gary Simmons, Valero’s senior vice president of international operations and system optimization, said the company was not ready to revise its forecast for RINs for 2017.
“We’re not really ready to revise our guidance at this time,” Simmons said. “We’re going to keep our guidance where it is. And we’ll just see how successful we are on some of these things about moving the point of obligation and what happens to RINs.”
The company has said it expects to spend an amount similar to the $749 million spent in 2016 to meet the federal renewable fuel requirements.
Refiners trade RINs to comply with federal law requiring transportation fuels sold in the United States contain minimum amounts of renewable fuels.
D6 RINs traded on Monday between 47 cents and 49 cents a piece.
Valero is part of a lobbying effort to change the point of obligation where renewable fuels are blended into motor fuels from the refinery to the distributor’s terminal. (Reporting by Erwin Seba; Editing by Marguerita Choy)