A federal tax credit that provides makers of biodiesel in 2009 expired last Friday. At only a $1 for gallon, this credit enabled many of the 180 biodiesel producers in the United States to "break even". Without this assistance, many of the smaller producers simply won't be able to make it.
A one year extension of the tax credit was included in a bill that was approved by the U.S. House, however it never made it through the Senate. Lawmakers say the tax credit will be retroactive if approved. But ethanol producers appear to be maintaining unflagging political support. And biofuels are not going to be consistently price competitive with petroleum for another 5-10 years without an excise/subsidy structure in their favor.
Clearly, biofuels will remain a fuel of impactful choice, not necessarily a cheaper alternative....David meets the powerful and politically wealthy Goliath.
