Turning Soybeans Into Diesel Fuel Is Costing Us Billions (npr.org)

This year, trucks and other heavy-duty motors in America will burn some 3 billion gallons of diesel fuel that was made from soybean oil. They're doing it, though, not because it's cheaper or better, but because they're required to, by law. From a report: The law is the Renewable Fuel Standard, or RFS. For some, especially Midwestern farmers, it's the key to creating clean energy from American soil and sun. For others -- like many economists -- it's a wasteful misuse of resources. And the most wasteful part of the RFS, according to some, is biodiesel. It's different from ethanol, a fuel that's made from corn and mixed into gasoline, also as required by the RFS. In fact, gasoline companies probably would use ethanol even if there were no law requiring it, because ethanol is a useful fuel additive -- at least up to a point. That's not true of biodiesel. "This is an easy one, economically. Biodiesel is very expensive, relative to petroleum diesel," says Scott Irwin, an economist at the University of Illinois, who follows biofuel markets closely. He calculates that the extra cost for biodiesel comes to about $1.80 per gallon right now, meaning that the biofuel law is costing Americans about $5.4 billion a year.

Comments

Normally I'm quite against biofuels

[Rei]

But it's important to know that in 2020 a new low sulfur standard on bunker fuel is going to come into play. That's going to put shipping in direct competition with diesel for refinery output, and will likely create a significant crunch in that regard. The right time to have killed off biodiesel's subsidies is either "several years ago" or "after the market adjusts to the new low sulfur standards", not during the crunch / adaptation timeperiods.

I mean, you can make the diesel crunch worse if you want if you're willing to drive up commodities prices further in order to accelerate the transition to electric shipping. There's a logic there. But as far as timing goes, diesel is going to be in a tight spot as it is without taking a lot of alternative fuel off the market.

Re:Normally I'm quite against biofuels

[Rei]

That would be great if the industry could react that fast, but it takes a lot longer than just a few years to convert a large portion of the world's total petroleum consumption from high sulfur sources to low sulfur sources. They're working on it, but there will be a supply-demand imbalance, and it will have financial consequences.

BTW, the IMO regulations come into effect at the start of 2020, not the end. Not much time left. The rule change was only announced this fall

It can also be dealt with, mind you, by installing scrubbers on ships - then they can still burn high sulfur fuel. But about 80% of shipping is expected to switch to lower sulfur crude, as the capital costs for ships to add scrubbers are quite high. There's another problem, in that the most affordable way to scrub sulfur from ship exhaust ends up dumping it into the sea... but then they're exposing themselves to a liability that years from now that might be banned and they'd have to undergo yet another retrofit.

cost

[Tom]

That might all be true, but has it occurred to any of those people that cost may not be the only factor that was considered when the law was created?

Omg, the sky is falling, run for the hills - somebody is thinking about something else than profit, profit, profit!

Stuff made from plants is renewable. Sooner or later we will have to switch to renewable, because - surprise - oil is only renewable on a scale of millions of years. So you can over a period of some decades slowly transition to renewables - with probably increased overall costs, definitely higher costs initially because everything is more expensive when you start it - or you can keep burning oil until it is actually over and then watch civilization crumble in the price shock.

The last numbers I could find in a quick search was biodiesel wholesale prices above $4 per gallon. That means with taxes, distribution and profits for the petrol station, it'll be somewhere in the $5-$6 range per gallon by my naive estimate.

Imagine the price of gas suddenly went up into that price range. I bet you know a lot of people who would have to make some hard life choices.

Re:Yet another example of rural leaching

[plague911]

You can buy it from elsewhere, cheaper, massively so, after accounting for the rural subsidies the US provides. The US deficit would vaporize and turn into a massive surplus if we dropped the rural communities and only had the urban and suburban areas.

There is plenty of waste oil for Biodiesel

[shawn95gt]

Virgin 'anything' oil will be expensive for Biodiesel. I used to use biodiesel exclusively. I drove almost 2 years using > 20 gallons of regular diesel. I bought the biodiesel in bulk from a local producer who ws making it from waste oil. With the subsidy it was usually about the same price as diesel. I bought fuel in bulk (200 gallon sat a time) which would 'fix' my fuel cost for however long it took me to burn 200 gallons of fuel. At 40+ MPG, it took a while :). I stopped using biodiesel after a diesel fill rendered my car un-drivable due to the injection pump leaking so bad. I sent the pump out for re-seal and it ended up costing $1000ish to repair the injection pump due to corrosion inside. The Root cause was deemed to be water in the biofuel. Once fixed, I haven't touched the special sauce. In general I'm not sorry I tried it, but it did seem to cause or as least exacerbate an injection pump issue, it got about 5% worse fuel economy, and seemed to make slightly less power. On the plus side, it usually smelled like Chinese food vs diesel exhaust stink. I still have the car but has since sold my home Biodiesel fuel station.

Re: The Plan.

[BlueStrat]

Even including waste handling, treatment, and storage, and decommissioning?

There's more waste. If modern designs that reused 'waste' as fuel were allowed to be built there would be no highly radioactive waste to deal with. But that would largely remove a divisive issue that generates a lot of political donations and gets the low-info types all fired up and marching in protest. The "anti-proliferation" reasons are kinda moot when we've effectively given Iran and N. Korea permission to go nuclear and even given Iran pallets of money to help them along to a nuclear ICBM capability.

Strat