Biodiesel Tax Incentive what does it mean. - PeachParts Mercedes-Benz Forum

Rafi · #1 11-18-2004, 03:30 PM

I am surprised no one posted this here before the most recent passage of biodiesel tax incentive. What does it mean and when are we going to see any effects?

http://www.biodiesel.org/resources/pressreleases/gen/20041011_fsc_passes_senate.pdf

boneheaddoctor · #2 11-18-2004, 03:50 PM

There have been comments related to the one offered byt he stae of MD.

Unfortunately there are no places that sell B100 within an hours drive one way from me. Nor an incentive in VA to my knowledge. But I could be wrong.

phidauex · #3 11-18-2004, 03:51 PM

Look here for more discussion on the topic: http://forums.biodieselnow.com/topic.asp?TOPIC_ID=3772

Here is my understanding of the effect of this law:

The bill is basically a federal excise tax credit (tax break) for commercial producers and distributers of biodiesel. If you sell road-taxed biodiesel your fuel taxes are lowered by one cent per percentage point of biodiesel per gallon. Hence, B20 (20% biodiesel, 80% petro-diesel) has its road taxes lowered by 20 cents per gallon. B100 is a full 1.00$ per gallon cheaper. The more commonly used B2 and B5 blends are two and five cents cheaper per gallon, respectively. That is a small amount to you and me, but it equates to thousands of dollars in savings.

Does this mean that biodiesel at the pump will go down by that amount? NO. Part of the reasoning behind the tax incentive is to lower prices, so we will see biodiesel prices going down a bit, but the other reason is to give companies more profit margin to increase their infrastructure. With a 20 cent tax break on B20, a company may choose to lower pump prices by 10 cents, and take the other 10 cents to build new pumps and new processing facilities. Improved infrastructure can then help lower future costs by increasing the economy of scale. However, pump prices will probably go down simply through the effect of competition, though they may not decrease by the entire amount of the credit.

Pre-bill studies showed that the increased demand for biodiesel through lowered prices, combined with the increased demand for feedstock due to companies expanding their infrastructure, will create up to 50,000 jobs in the next ten years, and send 1 billion $ of windfall profit to American agriculture.

This bill is a BIG STEP for biodiesel, and will help 'tip' biodiesel into mainstream communities. Like usual, expect the biggest users to be fleets and farms, but eventually we'll start seeing it in local pumps more as well. One of biodiesel's benefits, besides environmental concerns, is the fact that it is an American made product, made with American labor. With a poor economy, the last thing we need to be doing is giving all our money to other countries. Providing our own fuel source can lower costs, create jobs and support our economy.

Unfortunately, this bill does not mean much to home brewers, because it only affects people who have to charge a road-tax. If you are one of the 3 biodiesel homebrewers in the country who voluntarily reports and pays road tax on their homemade fuel, there may be a way for you to lower the amount of tax you pay, or receive a year end credit if you itemize your deductions.

This is not like the hybrid tax credits that some states have where you receive a year-end credit simply for owning a hybrid, rather, it affects the road tax on the fuel.

The first people affected will be fleet managers taking advantage of lower fuel costs, biodiesel producers who can take advantage of higher profit margins, and the farming community who can take advantage of higher demand for their feedstock. Joe 300D driver may notice the effect of the bill in the form of slightly cheaper biodiesel, and increased availability of pump biodiesel, however, as usual, Joe 300D driver will be the last to notice the effects, because we are in the minority when it comes to diesel use.

Whew. I hope that helps!

Peace,
Sam

phidauex · #4 11-18-2004, 04:07 PM

P.S. A handy fact sheet from the NBB (National Biodiesel Board):

http://www.biodiesel.org/members/membersonly/files/pdf/fedreg/20041022_Tax_Incentive_Fact_Sheet.pdf

boneheaddoctor · #5 11-18-2004, 04:10 PM

I keep hoping someone closer to me starts to sell it.....But then I am about to try to make my own. If I don't blow myself up or poison myself in the process.

phantoms · #6 11-18-2004, 07:47 PM

Is there a website that list places around the country that sell Bio?

engatwork · #7 11-18-2004, 08:44 PM

phantoms - there is some website floating around that lists the places that sell it. I'm sure there is one in the Savannah area. Our nearest one is Davis Oil Company in Perry, Ga. I was in college with one of the owners (but that don't get me a cheaper price

). Anyway, the first thing I'm putting in my new shop is a biod processor

. I got a line on some oil.

phidauex · #8 11-18-2004, 08:49 PM

To find retail pumps in your area (note, not ALL pumps are listed, but most are): http://biodiesel.org/buyingbiodiesel/retailfuelingsites/default.shtm

To find distributors for purchasing in quantity (delivered or u-haul-it in drums): http://biodiesel.org/buyingbiodiesel/distributors/default.shtm

Pumps often have odd hours or requirements, so use the listed phone number to call ahead for details. You might find it best to buy in quantity (55 gallon drums, for instance) and blend your own fuel (IE, when it is time to fill up use a cheap drum pump to fill a 5 gallon carboy with B100, drive to your favorite petro-pump, dump in the B100, and pump in the other 10 gallons. Ta-da, convenient B30ish!).

Peace,
Sam

mikemover · #9 11-18-2004, 08:50 PM

phidauex,

Thanks for the info and the links, bro! Very informative stuff.

I'm hoping someone near me in Atlanta starts selling the stuff soon....I need to search around and see if there might be a source for it that I don't know about yet. There's a couple of local "independent" guys making their own and selling it, but their prices are not competetive.

Mike

whunter · #10 11-18-2004, 09:54 PM

Quote:

Originally Posted by phantoms

Is there a website that list places around the country that sell Bio?

http://afdcmap.nrel.gov/locator/LocatePane.asp

http://www.biodiesel.org/buyingbiodiesel/distributors/default.shtm

phidauex · #11 11-18-2004, 10:03 PM

whunter, I already beat you to the NBB link.

But that NREL one is a good one, I haven't seen that one before. I like the search interface better than the NBB list. Thanks.

Peace,
Sam

83-240D · #12 11-18-2004, 10:22 PM

mikemover, i was quoted 3.50/g from a fella locally who wants to get started as a distrib. otoh i bought some in il. saturday that was 3.41 with taxes added on. 2.91 b4 taxes.

yes prices are all over tha map. it may make sense to start making it or get the conversion kit and run wvo. again otoh my commute is 2 miles so conversion is not the ultimate answer. my bike would work but i am not comfortable at 520 in the morning cycle commutiong country roads. nascar spoken here.

phantoms · #13 11-18-2004, 10:50 PM

Closest is over 100 miles from me.

mikemover · #14 11-19-2004, 02:02 AM

Quote:

Originally Posted by 83-240D

mikemover, i was quoted 3.50/g from a fella locally who wants to get started as a distrib. otoh i bought some in il. saturday that was 3.41 with taxes added on. 2.91 b4 taxes.

yes prices are all over tha map. it may make sense to start making it or get the conversion kit and run wvo. again otoh my commute is 2 miles so conversion is not the ultimate answer. my bike would work but i am not comfortable at 520 in the morning cycle commutiong country roads. nascar spoken here.

Yeah, that sounds about like the independent guys' prices around here. It just doesn't make any sense to me to pay that much....Not when I can get dino-diesel for $1.99 a gallon right down the street. Unless it's within a few cents of the "real thing", I don't see it going anywhere.....Most people just won't pay twice as much for it. I know I won't.

I'd love to make bio myself, or run WVO, or both, but I just don't have the time or the motivation to get set up for it right now....

Mike

pdxwaker · #15 11-19-2004, 12:39 PM

Quote:

Originally Posted by phidauex

Look here for more discussion on the topic: http://forums.biodieselnow.com/topic.asp?TOPIC_ID=3772

---snip

The bill is basically a federal excise tax credit (tax break) for commercial producers and distributers of biodiesel. If you sell road-taxed biodiesel your fuel taxes are lowered by one cent per percentage point of biodiesel per gallon. Hence, B20 (20% biodiesel, 80% petro-diesel) has its road taxes lowered by 20 cents per gallon. B100 is a full 1.00$ per gallon cheaper. The more commonly used B2 and B5 blends are two and five cents cheaper per gallon, respectively. That is a small amount to you and me, but it equates to thousands of dollars in savings.

---snip

Actually the tax credit maxes out at $.20/gallon => B20 has road taxes reduced by $.20 and B100 has road taxes reduced by $.20.