Hacker News Reader

Comment by pmorici | Hacker News Reader

"The interesting bit here is that is actually quite hard to figure out why what they did was illegal"

I wouldn't go that far. Each RIN needs to correspond to some physical bio-fuel. They were generating RINS but not manufacturing the corresponding fuel. Seems like straight forward fraud. Now had they been actually making the fuel but then dumping it in the trash and just selling the RIN I agree it would be harder to see what it was they were doing wrong but they weren't doing that.

View on HN

You can't exactly affix a number to a specific gallon of bio-fuel. That's where the whole scheme goes off the rails, to create unique ids that only exist in spreadsheets with no 1-1 link to some quantity of product.

It's a liquid, not a box of stuff.

Exactly, it's fungible, so you don't need to track specific gallons. The point isn't to track the specific molecules that represent one specific gallon, the point is to just track that a gallon was made and sold.

Nothing was made, nothing was sold, but he fraudulently tracked a creation and sale by creating the RIN.

How is this so difficult to imagine being games?

I "sell" you 10,000 barrels of fuel. Then I give you back 99% of your money. Rinse and repeat, you've generated lots of RINs with little capacity for anyone to catch you downstream. Contrast this with a carbon tax, where in order to legally generate revenue one must pay the tax.

RINs aren't generated when biodiesel is sold, they're generated when biodiesel is produced.

The RIN scheme makes sense. It allows a 10-percent industry wide requirement without requiring every company to mix 10% in its gas.

Affixing numbers to specific units of fuel is actually pretty much precisely what happened under US Interior Secretary Harold Ickes and the "certificates of clearance" oil production quota system implemented by DOI and the Texas Railroad Commission (it confusingly neither regulated railroads nor was called by the sensible acronym, it's referred to as the TRO). This system was in place from 1933 until 1972, and effectively regulated the global price and supply of oil over that period. Absent some initial hiccups and a slightly market disruption known as World War II, the result was a phenomenally stable price and match of oil to global demand from 1945 - 1973.

Daniel Yergin covers this in detail in chapter 13 of his truly epic history of oil, The Prize (1992).

https://www.worldcat.org/title/prize-the-epic-quest-for-oil-...

Also:

https://tshaonline.org/handbook/online/articles/mlc03

https://www.law.cornell.edu/uscode/text/15/715f

And a good, concise overview of the history here: http://www.reuters.com/article/2015/01/29/us-usa-crude-stock...

It's not necessary to dump it, they can burn it to run the rest of the factory, or a bitcoin mining site, or the biggest communal sauna ever, or ...

(I'm not sure that there are not some provisions to close these loopholes. https://xkcd.com/1494/ )

Reply on news.ycombinator.com