Last Updated on Friday, 30 July 2010 18:06
Written by ray newkirk
Friday, 30 July 2010 17:38
As you may have noticed, the price of biodiesel jumped up last month as biodiesel producers are not currently receiving the renewable fuel tax credit that has been in place for the past 5 years.
First, I’d like to point out that our price has jumped back down considerably the past two weeks, thanks to producers and retailers feeling even more squeezed than before to keep providing clean, renewable, domestic fuel. Again, the renewable fuel tax credit is still not in place.
I have heard people actually call this “renewable fuel welfare” while they ask, “Why should my taxes pay to support your choice of fuel?”
Good question but my response has to be “I’m paying to support yours!” By comparison, subsidies to Big Oil dwarf the minute amount of taxpayer investment in renewable fuels which should be eagerly embraced by all Americans. The disaster in the Gulf alone shows this all too well.
Ask anyone burning biodiesel in their car or truck why they use it and you’ll get one of several answers:
“Lower emissions, better for local economies, reduces foreign oil use, increases U.S.energy security, better for my engine and no wars for oil”.
When asked how much they’ll pay above current gas prices, responses range from 50 cents per gallon to “whatever it takes.” Most Green Station customers are also aware of why biodiesel costs more than petrol diesel and realize that if renewable fuels were actually sold on a level playing field, petroleum would be the “alternative” fuel.
When drivers using petro-diesel are asked why they don’t use biodiesel, and believe me I ask often, I sometimes hear the MYTH that biodiesel is bad for engines but the most frequent response is “It costs too much.”
Numerous studies have been done detailing associated taxpayer funded fuel costs and what the true price of gas would be if all these costs were added at the pump.
An International Center for Technology Assessment report done in 2003 divides the external costs of gasoline usage into five primary areas: (1) Tax Subsidization of the Oil Industry; (2) Government Program Subsidies; (3) Protection Costs Involved in Oil Shipment (editor’s note: this does not include costs of war) and Motor Vehicle Services; (4) Environmental, Health, and Social Costs of Gasoline Usage; and (5) Other Important Externalities of Motor Vehicle Use. Together, these external costs total $558.7 billion to $1.69 trillion per year, which, when added to the retail price of gasoline, result in a per gallon price of $5.60 to $15.14.
A UC Davis Institute of Transportation Studies report by Mark A. Delucchi (1995) estimates the total cost in 1991 of environmental externalities to be $54 billion to $232 billion. Human mortality and morbidity due to air pollution accounts for over three-quarters of the total environmental cost and could be as high as $182 billion annually. For the Los Angeles area, Hall et al. (1992) estimates that the annual health-based cost from ozone and particulate exposure alone to be almost $10 billion.
When we consider the fact that most industries we know today were boosted in the beginning with taxpayer help (and still are as many from farming, auto, oil, banking, airlines, energy suppliers and more can attest) everyone from treehuggers to fiscal conservatives should be embracing the domestic renewable fuel industry.
The biodiesel tax credit is currently attached to the Domestic, Manufacturing and Energy Jobs Act of 2010 but is not expected to see any movement before Congress goes on break Aug. 2nd. This provision will retroactively renew the biodiesel tax credit for one year, which will end Dec.31, 2010.
We’d also appreciate your help in contacting Congressmembers and Senators to support the following bills; H.R. 4070 and S. 1589. This is legislation that would provide for a multi-year extension of a reformed biodiesel tax incentive.
A few reference links are listed below.
Ray Newkirk, Principal, The Green Station, 433 Ocean St, Santa Cruz, CA 95060,
UCS non-monetary externalities
International Center for Technology Assessment
The current situation highlights the need for a certainty in federal policy and tax policy. If your Congressman and Senators have not done so already, ask them again to cosponsor H.R. 4070 and S. 1589, legislation that would provide for a multi-year extension of a reformed biodiesel tax incentive.
Domestic, Manufacturing and Energy Jobs Act of 2010