Triangle Biofuels Blog

From domesticfuel.com:

A YouTube video of EPA official Margo Oge testifying before a House panel in May reveals her providing radically incorrect information about the amount of corn and soybeans it takes to make biofuels.

The blunder occurred when Rep. Aaron Schock (R-IL) asked Ms. Oge, who is responsible for regulating all emissions within the United States, about the indirect land use issue. “It’s my understanding that the EPA’s Renewable Fuels Standard 2 methodology assumes that for every acre of soybean crop that is used to produce biofuel, an equal acre of ground is used in the Brazilian rainforest to replace that acreage, is that correct?” asked Schock.

“Obviously we know that it takes about 64 acres for a gallon of soy biodiesel,” she begins, and then corrects herself, even more incorrectly. “It’s actually the opposite. It takes 64 acres for corn ethanol and over 400 acres for a gallon of biodiesel.”

Actually, one acre of soybeans makes 64 gallons of biodiesel and one acre of corn makes over 400 gallons of ethanol. This may have been just a simple mistake - or maybe she really doesn’t know - but it is now possible that members of the U.S. House Small Business Committee believe that it takes a huge amount of corn and soybeans to produce biofuels because that is what she told them.

The YouTube video with commentary was posted anonymously by an account called “FreedomIs1st” and no one in the biofuels industry has taken credit for it - but it is very good and should be shared. In fact, it might be good for people in the industry to write to their congressional representatives, especially if they are on the House Small Business committee, to make sure they have the facts.

Watching the soybean oil and yellow grease prices today, I am struck by the fact that we’re supposed to be in the “Memorial Day Squeeze” right now with gas prices peaking and all energy costs surging. Instead, while it’s true that gas and diesel prices are up about 20 cents since the beginning of the year, it’s nowhere near as much as predicted.

Why? Because we still have a surplus of crude here in the US, with tankers of it parked out in the Gulf of Mexico. So why is soybean oil at .41/lb ($3.11 per gal) and Yellow Grease at .28/lb ($2.13 per gal)? Greed.

I don’t hear the media chiming away at the party line about how biodiesel and ethanol are driving up fuel prices this year. Again, why? Because most of the biodiesel and ethanol plants are shut down in 2009 because feedstock prices are too high, and fuel prices are too low. So apparently the “Food vs. Fuel” argument has lost a good bit of its steam. It’s not true this year… It wasn’t true last year. It was just circumstances that permitted the Ag industry to jack up prices and make extra profits. Good for you guys.

Now as the government claims to be pushing renewable fuels and trying to save the environment and become less dependent upon foreign fuel imports, we have no resources to do it that are priced reasonably.

The problem appears to be obvious. So why is nothing being done?

Somebody help, please…

It’s pretty obvious by now, to everyone except Washington, that the $1.00 per gallon tax credit for biodiesel producers isn’t working. What it has seemed to accomplish however, is to drive the cost of soybean oil up by $1.00 per gallon. Bravo. As of today, soybean oil is $.37 per pound or $2.77 per gallon. Diesel is $1.45 per gallon at the rack (before taxes). The math is pretty simple.

So after all this talk of making a “green” economy, biodiesel and ethanol plants are shutting down because they can’t compete with petroleum (again) and the Ag companies are raking in cash.  What’s the best part?  The biodiesel companies have to file all the paperwork with the IRS and wait a couple of months to get their subsidy back!  The Ag companies get their cash up front, and have no extra paperwork to file for it.   Nice. 

Seems like we never learn. 

What should they do? Well, for starters, the tax credit should be indexed against the market. Having a flat $1.00 per gallon credit just doesn’t make sense. Second, the credit should be given in such a way that it provides incentive for CONSUMERS to purchase biodiesel instead of to the producing companies or feedstock suppliers.   Less paperwork for us, direct benefit to the consumer (who’s the one actually using the fuel).

Alternatively, in an environment where Ag companies are used to price supports and price fixing, it’d also be nice to see a fixed price per gallon for inedible soybean oil that is specifically used for biodiesel, and mandatory allotments that must be sold. (Think tobacco, and it doesn’t sound that harsh.)

Whatever the solution, what we’re currently doing isn’t working. Everybody seems to be getting fat except the industry that is supposed to benefit from it.   Don’t believe me?  Ask any biodiesel producer about the wonderful US EPA Renewable Fuel Standard and RIN credits.  As a biodiesel producer who typically sells pure biodiesel, we don’t get a penny of the RIN credits unless we actually blend the fuel down to B80 (80% biodiesel / 20% diesel) or less (which means we have to become a petroleum blender).  The credit ends up getting passed on to, you guessed it, the petroleum industry for all their “hard work” in blending the fuel and selling it.   Again, great work Mr. Bureaucrat, you’ve stuffed more money in the Big Oil’s pocket once again.

Hey, I’m ready for that “Change” everybody was singing about back in November.  It can start any time.