The way Crittenden County farmer Boyce Johnson sees it, every time he fills up at the soy biodiesel pump, he increases demand for U.S. soybeans. But for demand to have a positive impact on prices, he's going to need some help.
For example, if all the nation's truckers burned just 2 percent soy biodiesel, it would increase the market for soybeans by about 450 million bushels annually. That's about 16 percent of U.S. soybean production every year and more than double current U.S. soybean ending stocks, reported by USDA.
By the same token, the United States would be hard-pressed to take soy biodiesel use much higher in the short term. “Biodiesel (which is made from almost any product containing oil, including soybeans) will never be a 100 percent replacement for petroleum diesel,” said Gordon Petty with Ritter Oil Co. in Crawfordsville, Ark. “We just don't have enough production capacity. But in years to come, the sky's the limit. If crude oil stays at $70 a barrel plus, then biodiesel has an advantage.”
Petty and Johnson were among several speakers at a Sept. 20 field trip for a group of students from Crittenden County's Wonder Junior High School. The trip included a farm tour and an introduction to the environmental and engine-health benefits of biofuels. Crittenden County, as well as Shelby County in west Tennessee, were recently cited by EPA for being out of compliance for air quality.
According to Eddie Brawley, head of metropolitan planning organization in Crittenden County, “This means we have to cut down on the amount of gasoline and diesel fuel we use.”
Biodiesel can help the effort in several ways, according to the experts.
“It is a boutique fuel,” Petty says. “It can be used to lower pollution and adds lubricity to your engine. We have some users who are using B99 (99 percent biodiesel), who tell me they get extra miles per gallon without any loss of power.”
Biodiesel is normally mixed with petroleum diesel to create a biodiesel blend and is used in compression-ignition diesel engines with few or no modifications. Biodiesel is biodegradable, non-toxic and essentially free of sulfur and aromatics, though users around the farm do notice a deep-fry odor coming from exhausts.
Just about any blend of biodiesel and petroleum diesel will reduce air pollution, according to Andy Couch with the West Tennessee Clean Cities Coalition, who drove to the field day in a 100 percent biodiesel automobile. “But it's not the answer to global warming and our overdependence on foreign oil.”
Recently, biodiesel has enjoyed a temporary price advantage over petroleum diesel thanks to petroleum fuel hikes and a blender's rebate of $1 per gallon for biodiesel. The blender's credit is immediately passed on to the customer purchasing the fuel, but it takes as long as three months for the blender to receive the rebate, which has somewhat hampered biodiesel distribution, according to Petty.
“When the blender sends his road use tax to the government every month, the rebate goes down as a credit for the taxes we owe. That's another reason why a lot of people don't want to deal with it. The blender's money is tied up. Smaller companies can be stressed for cash.”
Currently, Petty “splash blends” biodiesel and diesel from two tanks at his facility, meaning on-road customers can choose any blend of biodiesel they want. “To get the blender's credit of a dollar per gallon of biodiesel, “you have to blend a minimum of 1 gallon of petroleum diesel,” said Petty who, stores B100 in a 12,000-gallon tank.
But those who have the most to gain from a larger biodiesel market — farmers — are sometimes hamstrung in their effort to run more biodiesel, according to Johnson and Petty.
Johnson, who is on the board of the local Farm Bureau, noted that there is no legal limit to the blending percentage for on-road diesel. He runs B15 in his pickup. But federal law requires that off-road biodiesel blends higher than B2 be injected with a red dye. Petty says an injector to do this is on order, but until it gets there, he can't sell the higher blends to off-road users.
“When the injector comes in, biodiesel is going to take off in this county,” Johnson said. “We're going to jump to 20 percent to 40 percent blends on our off-road biodiesel overnight.”
If you're counting your red dyes, yes, that's two. Federal law already requires that all off-road diesel be mixed with a red dye to help thwart illegal sales. So when off-road diesel, already colored red, is blended at a percentage greater than B2, it will get a second shot of red dye. The government requirement includes a disclaimer that red dye itself can harm engines, a conundrum that has Johnson and Petty shaking their heads.
If industry can find a way to work through the government red tape, the subsidy will help encourage industry to build more biodiesel plants, which can cost a minimum of $25 million to construct, according to Petty, who sells gasoline, farm diesel, road diesel and jet fuel at his facility.
“The oil companies and distributors need to work together for the right reasons,” Petty said. “We have some politicians who think we can conserve our way out of today's problems. We won't. The only way you can do that is to turn into a Third World country. So let's blend in 5 percent biodiesel and cut our imports.”
Owners of older diesel-engine vehicles with steel fuel tanks should be cautious about starting out at too high a blend, Petty stresses. The cleaning action of the fuel tends to loosen particles attached to the tank which can then clog the fuel filter.
For those older vehicles, Petty recommends starting out with a clean fuel filter and burning no higher than a B10 blend until the engine starts to clean up. In addition, vehicles manufactured prior to 1992 may have to have their hoses replaced. Hoses on vehicles manufactured after 1992 “will tolerate a high percentage of biodiesel.”
Couch says the fledgling biodiesel industry has its work cut out, but it's making progress because of the environmental benefits of biofuel. “There were 55 billion gallons of diesel used last year, compared to 30 million gallons of biodiesel. If we just get 1 percent of the market, we would be doing good. The current energy bill did establish a biofuel standard to have a 7.5 billion-gallon biofuel market by 2012, although that's going to be ethanol mostly.”
“The biodiesel is going to fill a niche and it will help our farm markets,” Petty added. “We desperately need some help on commodity prices. Hopefully, as the industry grows, it will become more efficient. I can remember when ethanol was so much more expensive than gasoline. Today ethanol is as cheap or cheaper than gasoline.”