BIODIESEL MAGAZINE – Alternative Fuels Council Offers Biodiesel Strategy, Jeff Hove
The U.S. EPA’s Renewable Fuel Standard provides incentives for marketers to increase margins and be more competitive. Since its inception, the RFS has generally been a very successful program as blenders across the U.S. improved margins. If current legislative proposals move forward, marketers could witness another 13 years worth of similar incentives. But renewable identification number (RIN) value volatility—driven by political rumor, speculation and poor departmental management of small refinery exemptions—as well as a continually lapsing IRS blender’s tax credit make for difficult times for down-stream blenders. At times, the economic risk appears to be too high, and blending must stop and wait for better days.
The variables that make blending economics questionable at times, however, are the same variables that can give blenders hope that market conditions will get better. The downstream transportation fuel industry is no stranger to risk, as fuel pricing ebbs and flows daily. Biofuel producers typically don’t understand that blenders and marketers live in a world where they are selling at a loss one day and hoping for gains the next. This willingness to take on risk is what keeps the biodiesel industry moving forward during periods of policy uncertainty… View Full Article