Replies

The retail price differential between B99/B100 and #2 Diesel as of July 1, 2014 is 4.18 for B99 and 3.51 for #2. This means that there is a 20% premium for bio-diesel over #2. As production volume increases, that differential will shrink. Had the government been trying to reduce US dependence on foreign oil, and worked to increase bio-diesel production, this small differential would have already disappeared.

One example that I presented on how this could have been achieved, would not have cost the US taxpayers anything additional. The US government via the department of agriculture, already makes CRP (crop reduction payments) to farmers to NOT farm.

By restructuring the program so that farmers would be required to produce X number of gallons per Y number of acres eligible for CRP payments, the farmers who are in the best position to produce bio-algae based bio-diesel would have a fuel supply available to them right at the farm. If the farm produces more bio-diesel than they use on the farm, the excess can be sold into the market. For example, if a farmer wants to enter 600 acres of farm-able land into the CRP and receive CRP payments; instead of the current process of doing nothing, the farmer would have to show annual production of Y number of gallons of bio-diesel.

By adjusting the X:Y CRP ratio, there would be more and more bio-diesel brought into the economy. This would work to lower (and eventually eliminate) that 20% differential and also provides an additional revenue stream for farmers. Again, without any additional taxes.

Had this been started, and gradually increased, back in the '70s and '80s, I doubt we would have that 20% differential now ... and it is possible that bio-diesel could have been less costly than #2. But hindsight is always 20/20.