There is a very low demand for high priced biofuel. Once that demand has been met, the price will have to come down in order to attract consumers. Three years ago, cheap biodiesel was made from waste vegetable oil. As that finite supply is used up, producers switch to virgin oils. We are not yet at a price level that makes that switch attractive enough to investors, but we are close. What investors may not realize, however, is that as supply increases and the demand for high priced biofuel is met, the price will have to go way below that of Diesel to attract more demand. I'm guessing that point is about a buck a gallon. That is when an independent trucker who owns his own rig will risk the possible service and repair costs of running a high percentage of biodiesel. Now there are other markets for biodiesel that cloud the issue somewhat, but as long as the $1/gallon tax incentive is in effect, road use (which is taxed) will have the largest impact. For comparison, you can look at Brazil. They have replaced over 90% of their gasoline demand with 100% Ethanol distilled locally from cane and sugar beets. It is now about 1/2 the price of gasoline and gets better mileage in cars designed to run on it. The reasons for the current price discrepancy are different, but representive. They are so much further down the road in this process than we are that it is laughable. And they are doing he laughing.
-Dave Walton On 2/2/06, Mitch Haley <[EMAIL PROTECTED]> wrote: > > dave walton wrote: > > > > My free-market side winces at this type of legislation, but it is > necessary. > > Once diesel prices go over $4/gallon, the market will work all these bug > out > > by itself. Truckers will want to use it because it costs a buck less per > > gallon. > > You seem to think that the price of bio stays constant while the price > of dino goes up. Three years ago, bio was $1.70 while dino was $1.40, > both fully taxed. One might have thought demand for bio would go through > the roof when dino hit $2.50, but it's not happening. > > _______________________________________ > http://www.striplin.net > For new parts see official list sponsor: http://www.buymbparts.com/ > For used parts email [EMAIL PROTECTED] > > To Unsubscribe or change delivery options go to: > http://striplin.net/mailman/listinfo/mercedes_striplin.net >
