http://hoovnews.hoovers.com/fp.asp?layout=displaynews&doc_id=NR2001050 21675.3_1160000d7992b37b Hoover's Online May 1, 2001 8:11pm
From Diesel Fuel News, April 30, 2001, Vol. 5 No. 9 An ever-growing group of diesel and middle distillate end-users are awakening to what they see as a serious cost threat from "biodiesel" mandate pushes in Minnesota and elsewhere. The coalition now includes trucking companies, airlines, railroads, American Automobile Association affiliates, United Parcel Service, FedEx, Ryder Trucks, Minnesota Petroleum Council, National Association of Truck Stop Operators (NATSO), engine dealer Interstate Detroit Diesel, Marathon-Ashland Petroleum (MAP) and Koch Petroleum. Ironically, Koch is a leading proponent of free-market biodiesel sales, having helped pioneer the market with its U.S. Soy Gold Premium Diesel, sold to farmers during the relatively warm growing season. But Koch never favored government biodiesel mandates, and now it's taking flak from soybean farmers angry that Koch is publicly pointing out the high cost to end-users of such mandates. A bill to mandate biodiesel blends is pending in the Minnesota legislature; the mandate would start at 2% biodiesel but jump in 2006 to 5%, while electric generators, air compressors and refrigeration units could be forced to use 20% biodiesel. For airlines alone, the extra cost of a biodiesel mandate would be about 1.5 c/gallon, Koch found. That's because about 10-20% of kero-jet fuel would have to be diverted from today's jet fuel market to compensate for the gelling effect of mandatory biodiesel addition in frigid northern-states winters, Koch calculated. The biodiesel lobby disputed the claim, pointing to use of biodiesel- blend in snow plow trucks in winter in Hennepin County, MN. However, those trucks also used kero-jet in their fuel blend, Koch pointed out. What's more, a snow plow operation is a relatively high-load, high-heat cycle operation. This duty cycle favors the heating of diesel fuel circulating through injectors (typical of modern diesels), thus minimizing the gelling effect of biodiesel. The biodiesel-fueled snow plows were also stored in heated garages, unlike many other diesel vehicles. The biodiesel lobby meantime attacked a study by University of Minnesota economics professor Ford Runge, who calculated that the average soybean farmer would pay about $300/year more for biodiesel-blend fuel, yet only realize about $900 extra income from a potential 6 c/bushel increase in soybean prices from a biodiesel mandate. What angered the soy lobby is that Runge's cost-model assumed that biodiesel supplies and soybean demand would partly come from out-of-state, thus undercutting the higher income benefits claimed by the lobby pushing the biodiesel mandate. For non-farm diesel users, the mandate would add 2-6 c/gallon to the cost of diesel. The mandate would rise from 2% biodiesel to 5% biodiesel, dumping $48 million/year extra costs on truckers, farmers, railroads, off-highway vehicles and others. What's more, fuel terminals would require $3 million tank-heating upgrades to handle blended soy biodiesel during winter, Koch discovered. Citing recent testimony by farm co-op Ag Processing Inc., the Runge study also pointed out that biodiesel mandates could trigger a surge in foreign supplies, undercutting the "energy security" benefits claimed by the soy lobby. "Any significant run-up in domestic [soy] prices will draw imported materials to meet the demand," the Ag Processing analysis pointed out. - Jack Peckham Biofuel at Journey to Forever: http://journeytoforever.org/biofuel.html To unsubscribe, send an email to: [EMAIL PROTECTED] Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
