By May, it began to appear that the EPA would leave the amount of biofuel that refiners were required to blend into gasoline mostly unchanged in 2018. RIN prices began to rise steadily, bumping higher as the EPA indeed proposed keeping levels steady.
Later that month, a federal appeals court ruled the Obama administration had erred by setting blending levels below previously determined levels. That raised concerns blenders would have to buy more RINs, further supporting prices. CVR Energy's stock fell about 8 percent and CVR Refining shares tanked more than 15 percent in one day.
Last week, reports surfaced that the EPA would not take Icahn's suggestion to shift the burden of buying RINs from refiners to blenders.
That cut off the primary path for Icahn's bet to pay off. This comes as CVR Refining reported a liability of $279.9 million tied to its biofuel blending obligation through the second quarter.
That obligation jumps to $321.6 million based on the recent high RIN price of 88 cents, FBR Capital Markets calculated in a research note. If CVR Refining does not start covering its RIN obligation, its liability could balloon to $390 million, the investment bank said.
To be sure, RIN prices could yet fall, shrinking CVR Refining's liability, if it gets regulatory relief from the EPA on another front, or if market conditions change.
Kloza, however, believes RIN prices have likely reached stasis around the 90-cent level, and Lipow believes they could head higher from Friday's prices around 86 cents.
"Based on the renewable fuel standard of 2017 and 2018, I expect that RIN prices are going to be drifting up during the course of 2017," Lipow said.