Biofuel, petroleum divide widens

Source: Dan Piller • Des Moines Register  • Posted: Wednesday, February 8, 2012

Battle for the fuel pump intensifies

The makers of petroleum-based gasoline and diesel fuels and those who produce biofuels such as ethanol and biodiesel seem to agree on little besides the fact that both produce a fuel that is dispensed through a pump.

Control of that pump seems increasingly at issue.

A recent session at the National Biodiesel Conference in Orlando, reported by Biodiesel Magazine, showed that oil company representatives are giving no quarter in their opposition to mandated use of biofuels.

What has set off old oil is the fact that the government mandates that they purchase Renewable Identification Number (RIN) credits if they don’t use enough biofuels. That’s getting harder to do, particularly as the supply of ethanol has hit the so-called “blend wall” and advanced forms of biofuels from sources other than corn still aren’t available.

Charles Drevna, president of the American Fuel and Petrochemical Manurfacturers Association, told the conference “when 20-plus percent of the oil industry’s market is mandated away, that’s not good, he expressed. Then, being forced to buy RINs for a product that doesn’t exist (cellulosic ethanol), or a product that lowers gas mileage (corn ethanol) when the government is mandating that automakers increase vehicle mileage, no wonder we’re a little paranoid.”

Drevna called the Renewable Fuels Standard 2, passed in 2007, “an anachronism.”

Dan Gilligan, president of the Petroleum Marketers Association of America, said “from a petroleum refiner’s perspective, it’s not the biomass-based diesel portion of RFS2 that obligated parties are unhappy with, it’s the conventional and cellulosic ethanol buckets. I have as much chance of buying a unicorn as I do a gallon of cellulosic ethanol. If it were just you guys (biodiesel), we could make it work. But it’s not.”

The traditional oil and gas industries have stepped up their attacks on renewable fuels such as ethanol and biodiesel in part because of expanded domestic production of crude oil and natural gas in the Lower 48 states.

Drevna said ” in 2007 when the Renewable Fuel Standard policy was drafted, we thought we were an energy-poor country. Since then of course, domestic oil and natural gas deposits have been producing record amounts of fossil energy.”

Ethanol and biodiesel have lost their blender tax credits, and wind energy’s production tax credit is under serious attack before it lapses at the end of this year.

Despite the confrontation, Alicia Clancy of Ames-based Renewable Fuels Group, the nation’s largest biodiesel producer, said “we appreciate the fact that Mr. Drevna came of the conference and shared his point of view. His members are our industry’s customers and it’s important for both organizations to build a stronger relationship to make biodiesel a growing part of the RFS2 and of a renewable energy complex.”

Iowa is the nation’s largest producer of ethanol and biodiesel and second-largest producer of wind energy.