Fuel price provision in biodiesel bill debated

Tuesday, April 29, 2008 | 3:37 p.m. CDT; updated 6:06 a.m. CDT, Tuesday, July 22, 2008

COLUMBIA — A provision designed to protect consumers from having to pay higher prices at the pump took center stage in the Capitol on Tuesday during a hearing on legislation that would require all diesel fuel sold in Missouri to be blended with biodiesel fuel derived from soybeans.

If biodiesel is more expensive than conventional diesel, the proposed 5 percent blend would not be required and conventional diesel could be sold without penalty.

Greg Sharpe, president of the Missouri Soybean Association, told the House Transportation Committee that mandating a blend of soy-based biodiesel “is a lifesaver for our industry” by providing another market for one of Missouri’s top two crops.

“The main thing is it’s a very conditional mandate,” Sharpe said of the “price trigger” built into the legislation.

But its conditional nature comes with unintended consequences, said Bruce Heine, spokesman for Magellan Midstream Partners, based in Tulsa, Okla. Magellan’s pipelines provide 50 percent of the state’s diesel fuel. He said the company is in a difficult position because it supports the growing use of ethanol and biodiesel and is looking into ways to transport both fuels through its pipes.

If the bill passes in its current form, Magellan would have to invest $1.5 million to blend the biodiesel on site for each of its five terminals to meet the mandate, he said.

“With the price trigger, some days it’s on and others it’s off, it’s essentially forcing us to make a bad investment,” Heine said.

It may make more sense for the company to close its mostly rural terminals, like the one in Palmyra, than to make the investment to meet the mandate.

He suggested that Missouri add incentives for terminal providers into the bill to help offset the costs of its investments.

The Missouri Petroleum Marketers and Convenience Store Association took a neutral position on the bill while saying it favors the price trigger.

“The price trigger is absolutely critical to ensure that consumers get the best bang for their buck at the pump,” said Ron Leone, the association’s director.

The mandate would require 60 million to 62 million gallons of biodiesel a year to fulfill the mandate. Missouri’s four major biodiesel plants produce about 130 million gallons per year, more than enough to meet the mandate, said the bill’s sponsor, Sen. Bill Stouffer, R-Napton.

The bill also would regulate the quality of biodiesel. Several representatives expressed concern about biodiesel gumming up in engines, but the mandates’s proponent pointed out that the quality standards in the bill prevent those problems.

Stouffer also said that burning biodiesel removes 47 percent of the particulate emission, or ash, and 80 percent of the carbon monoxide and dioxide emissions.

Alan Weber, vice president of MARC-IV Consulting, who has worked with biodiesel since the 1990s, said there may be a slight reduction in mileage, but not enough to make a noticeable difference.

“The best thing about biodiesel blends is the transparency,” he said. “You don’t notice any difference. You get all of the environmental benefits without suffering any operational problems.”

The House Transportation Committee will discuss the bill next week.

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