The market for ethanol blending credits known as RINs surged to a new record in a market surge driven by fears of supply shortages and blending limits for alternative fuel.

Traders said RIN blending credits for 2013 were trading between $1.05 and $1.13 a gallon, up from roughly 74-80 cents and well up from the mid-20 cents at the end of January.

“Ethanol (RIN) is going crazy. These ethanol values (RINs), they are phenomenal,” said Jeff Hove, who trades RINs for roughly 150 US blenders through RIN Alliance, an aggregator and trader of the ethanol credits. 

US gasoline futures rallied to a 2013 high because the high-priced ethanol credits were raising refiners’ costs and making fuel imports too expensive. 

RIN, which stands for Renewable Identification Number, is a 38-character numeric code that producers or importers of renewable fuels are required to generate for each gallon. One gallon of corn ethanol correlates to one RIN. RINs are used by blenders as credits to meet volume requirements of the US renewable fuels standard (RFS), which for 2013 requires gas refiners to use 13.8 billion gallons of renewable biofuel.

There are several factors driving the surge in values, most notably concern that demand is artificially constrained by a prevailing 10 per cent blending limit for ethanol into gasoline.