Integrateds, Refining, and Midstream: Biofuels Pulse – How we learned to stop worrying & embrace the asymptote

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Integrateds, Refining, and Midstream: Biofuels Pulse – How we learned to stop worrying & embrace the asymptote

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Integrateds, Refining, and Midstream

Biofuels Pulse – How we learned to stop

worrying & embrace the asymptote

Industry Overview

RINs minor vs other inflation; imports can balance mkt 19 June 2026

D4 and D6 RINs prices look asymptotic lately, about 40 cents above prior highs, and Equity

investors are concerned that even higher prices may come and compel the EPA to act by United States

reducing demand amid stubbornly low US D4 RIN generation (still little m/m growth in Oil & Gas

May data). For perspective, RINs cost passed through to consumers is about $13-15/bbl Conor Fitzpatrick

or $0.30-0.36/gal today, a record but also around the average of US state gasoline/diesel Research Analyst

taxes, and much smaller than current crack spreads, as well as crude deflation over the BofAS+1 646 855 5711

last 2 months. There are several potential sources of RINs inflation from here – 1) conor.fitzpatrick@bofa.com

RD/BD capacity is still underutilized, so RINs may rise to incentivize higher utilization Jean Ann Salisbury

Research Analyst

(other margin items could contribute, too); 2) diesel price deflation post-Iran War could BofAS

require RINs to inflate to offset BD margin losses; 3) any further feed cost inflation +1 646 855-1470

jeanann.salisbury@bofa.com

could also be passed through RINs prices. A worst case scenario from concerned

James Larkin, CFA

investors is that shortfall in US max BBD utilization cannot be bridged by imports, Research Analyst

causing record RVO deficits. We think this scenario is unlikely; through 2027, ratable US BofAS james.r.larkin@bofa.com

BBD production shortfalls (~500mm gal) and net exports (~400) can be plugged by both