The Renewable Fuels Standard — that oh so ingenious method of creating a fake market for a not-green, not-clean, food-price-spiking, special-interest-serving and overall terrible product — requires that the nation’s refiners blend an ever-increasing volume of specified and so-called biofuels into the fuel supply. Refiners, however, are insisting that we’re now getting to a point at which mixing the required volumes will exceed the 10 percent ethanol threshold they find acceptable for use in cars and trucks, a.k.a. hitting the “blend wall.” Refiners that don’t manage to achieve the mandated volume of biofuels are required to purchase credits (RINs), and heightened demand for the credits is steadily pushing up their prices as the “blend wall” gets closer:

The price of US ethanol credits has notched a new high as oil companies scramble to comply with a biofuels mandate that Washington has given no hint of easing.

The small, illiquid market has surged more than 2,300 per cent this year as petrol refiners and importers fear scarce future stocks of the credits.

The credits, known as renewable identification numbers, jumped to a record $1.25 per gallon early on Monday, surpassing previous levels reached in March, according to Starfuels, a broker. …

The US Environmental Protection Agency, which administers the mandate, has said it plans to announce targets for ethanol consumption this summer.

And you can count on the EPA planning to hike up the mandate still further — seeing as how they’ve been known to not only model some of those requirements after their completely fanciful projection models for cellulosic biofuels that aren’t actually commercially available in the required amounts, but to then try to penalize companies for not complying. …And then raise those requirements for said non-existent biofuels, again. Yes, this is real life.

And while they definitely do not constitute a complete reason for the rise in gasoline prices, these mandated credits are definitely a factor in prices at the pump.

A leading U.S. oil executive urged legislators on Tuesday to relax a requirement to use renewable fuel in gasoline, blaming an “out of control” market in biofuel credits known as RINs for adding to fuel costs in a recent run-up in gasoline prices.

At a Senate Energy Committee hearing, lawmakers sought answers for why a surge in domestic crude oil production to the highest level in over two decades had failed to bring down fuel prices. Average U.S. gasoline rates jumped 15 cents over the past week to $3.64 a gallon on Monday, data showed.

Oil refiner Valero Energy Corp Chief Executive Bill Klesse said the government’s renewable fuel mandate is affecting prices in the refined fuel market, repeating a long-standing source of aggravation for the energy industry. …

“The thing the government can do is to get a hold of RINs,” Klesse said. “RINs are out of control.”