# Hitting the “Blend Wall”: Renewable fuel credit prices hit an all-time high



## Bamby

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.”




HotAir


----------



## Kane

Burning corn in our cars? ...  now that's just plain silly.


----------



## 300 H and H

I have argued in the past the value of our currancy has more to do with food prices than ethanol ever did.. I still stand by that arguement. We are still the worlds super market, and every one elses currancy is worth more relative to ours. Very high exports result. But recently the dollar has gained some value, but not very much relative to it's historcal value.

Regards, Kirk


----------



## Bamby

The way I'm understanding this is, the government mandates that X gallons of ethanol be blended with refined gasoline for sale at the pump for a given year. If what you get from the pump is 10% ethanol and 90% gasoline, then the total amount of blended gas sold at the pump has to be ten times X. Now X is a fixed number set by the government, unaffected by market forces. No matter how much gasoline is sold at the pump, refiners are required to blend X gallons of ethanol into the product.

Now what happens if the market demand for gasoline is only nine times X gallons? You hit the blend wall, you can still only blend a maximum of 10% ethanol with 90% gasoline for sale, so you are using less ethanol than you are required by law to use. To make up the difference between what you are required by law to use, and what you are actually blending into gasoline for sale at the pump, you must purchase the RINs, credits for ethanol that you are required to use but can’t because you can’t increase the ethanol content of the actual gasoline sold at the pump beyond the 10%. The cost of the "unused ethanol" or RINs  is added into the cost of production of the gasoline and passed on to the consumer at the pump in "higher fuel prices".


----------



## 300 H and H

Bamby said:


> The way I'm understanding this is, the government mandates that X gallons of ethanol be blended with refined gasoline for sale at the pump for a given year. If what you get from the pump is 10% ethanol and 90% gasoline, then the total amount of blended gas sold at the pump has to be ten times X. Now X is a fixed number set by the government, unaffected by market forces. No matter how much gasoline is sold at the pump, refiners are required to blend X gallons of ethanol into the product.
> 
> Now what happens if the market demand for gasoline is only nine times X gallons? You hit the blend wall, you can still only blend a maximum of 10% ethanol with 90% gasoline for sale, so you are using less ethanol than you are required by law to use. To make up the difference between what you are required by law to use, and what you are actually blending into gasoline for sale at the pump, you must purchase the RINs, credits for ethanol that you are required to use but can’t because you can’t increase the ethanol content of the actual gasoline sold at the pump beyond the 10%. The cost of the "unused ethanol" or RINs is added into the cost of production of the gasoline and passed on to the consumer at the pump in "higher fuel prices".


 
I believe your correct about how the program works. SO the government ends up with the money? It is starting to smell llike a tax....Surprise?

Regards, Kirk


----------



## muleman RIP

Take corn out of the pump and food prices will stabilize. Fuel mileage will increase which lowers demand and allows us to utilize our own oil. Send the damn blended junk to the Caribbean countries that buy a lot of our gas supply anyway. The end result would still meet the demands of the greenies who want to save the world. It just wouldn't kill our pocketbooks to do it.


----------



## baldy347

Is it not necessary to send refined gasoline back to country of origin of crude oil suppliers? I would think the same 10% [maybe heavy 10%?] should be acceptable there as well


----------



## Kane

If the progressive left would wise up and allow America to exploit her own fossil fuel resources (probably the greatest reserves in the world), we wouldn't be talking about burning corn in our cars.  We would be energy independent, thumbing our nose at the world.

Alas, fucking liberals ...
.


----------



## FrancSevin

Kane said:


> If the progressive left would wise up and allow America to exploit her own fossil fuel resources (probably the greatest reserves in the world), we wouldn't be talking about burning corn in our cars. We would be energy independent, thumbing our nose at the world.
> 
> Alas, fucking liberals ...
> .


 
Like so many thing in politics, this is not about saving the planet. ETOH is disliked bythe evironmentalists as well.

This is about the agricultural vote. Farmer welfare. Nothing more, nothing less.

Both the left and the right whore for this vote

We are Rome.


----------



## 300 H and H

FrancSevin said:


> Like so many thing in politics, this is not about saving the planet. ETOH is disliked bythe evironmentalists as well.
> 
> This is about the agricultural vote. Farmer welfare. Nothing more, nothing less.
> 
> Both the left and the right whore for this vote
> 
> We are Rome.


 

I seriously doubt that it is just from farm votes. Last time I checked we are less than 2% of voters. Now how do you figure we are so allmighty powerfull that we are holding the rest of the nation hostage to ethanol...Really?

With corn now below the cost of many farms cost of production, (we,ve had a market collapse in corn and soy by the way) We're being told ethanol doesn't matter anymore as we have "maxed out" production, and there will be no more than previous years. No matter 1/3 of corn acers are poor or not there at all....

Farmers are now being beaten by the invisible club that USDA wields, by overstating acers and production to give buyers a break. You guys know how good they are at telling lies?

They sure are buying up farm votes, and of course we rule the land with our mandates... 

And no rain for so much of the land, and it is suffering yet again this year.

Regards, Kirk


----------



## Kane

300 H and H said:


> I seriously doubt that it is just from farm votes. Last time I checked we are less than 2% of voters. Now how do you figure we are so allmighty powerfull that we are holding the rest of the nation hostage to ethanol...Really?
> 
> 
> Regards, Kirk


We might be surprised how many congressmen, big shots, pro-athletes and celebrities pretend to be farmers --  all benefiting from the lard of the farm bill.   Nancy Pelosi is probably a 'farmer'. Well, at least it's not as overt as some other USDA 'farm bills'.  And who could ever vote against a farm bill? ...  you know, the starving children and all.

*Congressman Compares Black Farmers' Settlement to 'Slavery Reparations'*

*



*_The  House approved settlements today for black farmers whom the federal  government had discriminated against in the past. In the debate  beforehand, however, Rep. Steve King compared this to "slavery reparations" from the "very, very urban" Barack Obama._

 The Senate last week finally approved the multi-billion-dollar funding  for the Pigford II and Cobell settlements, which will allow the  government to pay out claims to African-American farmers and American  Indians who were discriminated against in recent decades by government  agencies. Now, the House — which has passed the funding several times  over — will have to approve it, probably this week. The House, in fact,  was voting on procedural motions surrounding the bill as this post was  written.

 That means the opponents are coming out of the woodwork.

 Rep. Steve King (R-IA), who's been one of the most vocal opponents of  the Pigford settlement for black farmers, has taken to cable news and  the floor of the House to speak against the settlement. King's argument  is that the bulk of the Pigford II claims are fraudulent because there  are fewer black farmers than claimants — a flimsy argument when you  consider that many African-Americans lost their farms over the past few  decades due, in part, to USDA discrimination that denied them loans —  which is the point of the settlement program.

 On Monday night, he suggested that President Obama, as a senator, may have been prejudiced to help the black farmers.

 "Figure this out, Madame Speaker: We have a very, very urban Senator,  Barack Obama, who has decided he's going to run for president, and what  does he do?" King said. "He introduces legislation to create a whole  new Pigford claim."

 He then said the claims — which stem from discrimination against black farmers in the 1980s and 1990s — are "slavery reparations."

 "We've got to stand up at some point and say, 'We are not gonna pay  slavery reparations in the United States Congress,'" he said. "That  war's been fought. That was over a century ago. That debt was paid for  in blood and it was paid for in the blood of a lot of Yankees,  especially. And there's no reparations for the blood that paid for the  sin of slavery. No one's filing that claim.

 The Pigford claimants, he said, "They're just filing a claim because  they think they can get away with it." Standing up against the  settlements, while unpopular, he said, is "a matter of justice and  equity."

 King's anti-Pigford cohort, Rep. Michele Bachmann (R-MN), has also  spoken out. She told the House that Pigford is "pure and complete fraud"  and would be a "perfect" place to start cutting the federal budget.


----------



## FrancSevin

Actually, I referred to the farm vote as the agricultural vote. That would include the entire AG business. There are really two industries in Iowa that control politics,,,agriculture and insurance. Both favorite lap pets in Washington DC.

But agriculture is king there as in many neighboring states. It is neither evil or mendacious to say so.

To suggest agriculture has little power in states like Iowa is to deny, or at the very least ignore, the true realities. Except for farmers, I know of very few people in that state who do not admit the power of that minority, the Iowa farm industry, in their state and national politics.


----------



## Kane

*Can you say Boondoggle?*

  /ˈbunˌdɒgəl, -ˌdɔgəl/  Show Spelled [boon-dog-uhl, -daw-guhl]  

1. a product of simple manual skill, as a plaited leather cord for the neck or a knife sheath, made typically by a camper or a scout. 

2. work of little or no value done merely to keep or look busy. 

3. a project funded by the federal government out of political favoritism that is of no real value to the community or the nation. 

  verb (used with object)  4. to deceive or attempt to deceive: to boondoggle investors into a low-interest scheme. 

  verb (used without object)  5. to do work of little or no practical value merely to keep or look busy. 

verb (used with American chumps)  6.  to burn corn in our cars.

*Origin: * 
 1930–35,  Americanism; said to have been coined by R. H. Link, American scoutmaster, as name for def 1


----------

