Crosspost from Mark on the Burnveggies list. >[Burnveggies] Pick your poison (was: >girl Mark [EMAIL PROTECTED] >Mon, 6 Oct 2003 13:46:40 -0700 (PDT) > >the interesting thing is that this labeling is coming >right at the time when we just got a curse in >disguise- the 20 cents per gallon federal tax >reduciton for biodiesel. Let me explain: > >-There is very, very little money to be made making >and selling biodiesel (something like .08 cents profit >for a large producer, according to Superior Process >Technologies, a broker of biodiesel plants) > >-the federal excise tax reduction works like this:the >24 cent tax comes down one cent for each one percent >of biodiesel in a blend, UP TO B20, then no more >reduction for higher blends. Note that this does not, >say spread out the 20 cent reduction over a large >ratio- like 20 cents reduction for B100 and 10 cents >recution for B50 or anything like that. > >-if you are in the business and make or broker or >otherwise handle a gallon of biodiesel and sell it to >the general public as B100, you are effectively >getting a 20 cent subsidy. > >- If you handle the same gallon of biodiesel and >divide it five ways and sell it to the copnsumer as >B20, you are effectively getting a $1.00 subsidy on >that original gallon > >-subsidies can make or break the profitability of an >agricultural product like biodiesel. > >Question: if you are in the business (and aren't >Yokayo or Biofuel Station in Laytonvile or Biofuel >Oasis), tell me, would you encourage the sales of B100 >or of B20? > >I am getting this info straight from the industry by >the way, not making this up (I'm practically quoting >from the Biodiesel business management course at ISU >for instance). The industry considers the tax credit >to be a $1 a gallon subsidy, period. At no point in >the calculations does the B100 market come into the >picture for large producers. > >[there are also other reasons why the industry >considers B20 it's best strategy- it's got to do with >possible percentage of market penetration, which is >directly connected to pricing and size of certain >markets (fleets versus passenger cars being different >markets for instance).] > > California is a little bizarre in the amount of >demand for B100 for passenger cars of course. Changing >the labeling (Western states oil is one of the >sponsors of the labeling change, no?) to discourage >B100 use, plays interestingly into the picture here. > >Conspiuracy theory or not, this is some of the >little-known economics of biodiesel sales which I >think we consumers need to be much more aware of. The >flip sidde is also that as I've said many times, there >is also the issue that small brokers can do a much >better job of educating consumers (and mechanics/car >dealers, as is already done by several activists in >this area) so that the scenario of someone plugging >their fuel filter and suing the gas station doesn't >happen and the general public's level of education >around biodiesel usage is raised. > >Now, I don't think that AGP or WestCentral or Imperial >Western are going to bow to wacko california B100 >consumer demands ands start promoting B100 sales- the >economics are such that they will continue to favor >B20 or B02 and ignore passenger car drivers because >we're too small of a market. >But these and other economics are a compelling reason, >rock-solid reason why we need to support local >producers, local, B100-centered brokers and fuel >sources if possible rather than gas stations (ie Oasis >or Biofuel Station or delivery Yokayo-style or coop >bulk buying). there's just no way that one of the >large producers or the large-scale petroleum >distributors can EVER do a good job of proividing good >service to consumers, especially on the 'user >education' level. With other alternative fuels, that >education is also usually done by kit manufacturers or >vehicle sales people rather than fuel sellers. >Biodiesel is a little different due to it's 'put it >into any vehicle and go!' potential. education and >looking at individual users' circumstances is 'outside >the box thinking' for petroleum fuel sales people, >however- to spend time educating their consumers on a >new fuel and it's potentially different effects on >their vehicle isn't something the industry is set up >for- yet if we have local brokers/sellers/producers we >are in a much better situation to have the public >served this way. > >mark
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